[Chapter XII] Tables of Differential Rent and
Comment

[1. Changes in the Amount and Rate of Rent]

A further comment on the above: Supposing more
productive or better situated coal-mines and
stone-quarries were discovered, so that, with the same
quantity of labour, they yield-ed a larger product than the
older ones, and indeed so large a product that
it covered the entire demand. Then the value and
therefore the price of coal, stones, timber, would fall and
as a result the old coal-mines and stone-quarries would have
to be closed. They would yield neither profit, nor
wages, nor rent. Nevertheless, the new ones
would yield rent just as the old ones did previously
although less (at a lower rate). For every
increase in the productivity of labour reduces the amount of
capital laid out [in] wages, in proportion to the constant
capital which is in this case laid out in tools.
Is this correct? Does this also apply here, where the
change in the productivity of labour does not arise from a
change in the method of production itself, but
from the natural fertility of the coal-mine or the
stone-quarry, or from their situations? One can only
say here that in this case the same quantity of
capital yields more tons of coal or stone and that therefore
each individual ton contains less labour; the total tonnage,
however, contains as much as, or even more [labour], if the
new mines or quarries satisfy not only the old demand
which was previously supplied by the old mines and quarries,
but also an additional demand, and, moreover, an additional
demand which is greater than the difference between the
productivity of the old and that of the new mines and
quarries. But this would not alter the organic
composition of the capital employed. It
would be true to say that the price of a ton, an individual
ton, contained less rent, but only because altogether it
contained less labour, hence also less wages and less
profit. The proportion of the rate of
rent to profit would, however, not be affected by
this. Hence we can ||567|
only say the following:

If demand remains the same, if, therefore, the
same quantity of coal and stone is to be produced as
before, then less capital is employed now in the new
richer mines and quarries than before, in the old ones, in
order to produce the same mass of commodities.
The total value of the latter thus falls, hence also the
total amount of rent, profit, wages and constant capital
employed. But the proportions of rent and profit
change no more than those of profit and wages or of profit
and the capital laid out, because there has been no
organic change in the capital employed. Only
the size and not the composition of the
capital employed has changed, hence neither has the method
of production.

If there is an additional demand to be satisfied,
an additional demand moreover that equals the difference in
fertility between the new and the old mines and quarries,
then the same amount of capital will be used now as
previously. The value of the individual ton
falls. But the total tonnage has the same value as
before. As regards the individual ton, the size of the
portions of value which resolve into profit and rent
decreased together with the value it contained. But
since the amount of capital has remained the same and
with it the total value of its product and no organic
change has taken place in its composition, the absolute
amount of rent and profit has remained the same.

If the additional demand is so great that with the
same capital investment it is not covered by the difference
in fertility between the new and the old mines and quarries,
then additional capital will have to be employed in the new
mines. In this case—provided the growth of the
total capital invested is not accompanied by a change in the
distribution of labour, the application of machinery, in
other words provided there is no change in the
organic composition of the capital—the amount
of rent and profit grows because the value of the total
product grows, the value of the total tonnage, although the
value of each individual ton falls and therefore also that
part of its value which resolves into rent and profit.

In all these instances, there is no change in the
rate of rent, because there is no change in the
organic composition of the capital employed (however
much its magnitude may alter). If, on
the other hand, the change arose out of such a
change—i.e., from a decrease in the amount of capital
laid out in wages as compared with that laid out in
machinery, etc., so that the method of production itself is
altered—then the rate of rent would fall,
because the difference between the value of the commodity
and the cost-price would have decreased. In the three
cases considered above, this does not decrease. For
though the value falls, the cost-price of the individual
commodity falls likewise, in that less labour is expended
upon it, less paid and unpaid labour.

Accordingly, therefore, when the greater productivity of
labour, or the lower value of a certain measure of
commodities produced, arises only from a change in the
productivity of the natural elements, from the difference
between the natural degree of fertility of soils; mines,
quarries etc., then the amount of rent may fall because,
under the altered conditions, a lesser quantity of capital
is employed; it may remain constant if there is an
additional demand; it may grow, if the additional
demand is greater than the difference in productivity
between the previously employed and the newly employed
natural agencies. The rate of rent, however, could
only grow with a change in the organic composition of the
capital employed.

Thus the amount of rent does not necessarily fall
if the worse soil, quarry, coal-mine etc. is
abandoned. The rate of rent, moreover, can
never fall if this abandoning is purely the result of
lesser natural fertility.

Ricardo distorts the correct idea, that in this case,
depending on the state of demand, the amount of rent
may fall, in other words depending upon whether the
amount of capital employed decreases, remains
the same or grows; he confuses it with the fundamentally
wrong idea, that the rate of rent must fall,
which is an impossibility on the assumption made,
since it has been assumed that no change in the
organic composition of capital has taken place,
therefore no change affecting the relationship between
value and cost-price, the only relationship that
determines the rate of rent.

Supposing that three groups of coal-mines were being
worked: I, II and III. Of these, I bore the absolute
rent, II a rent which was twice that of I, and III a rent
which was twice that of II or four times that of I. In
this example, I bears the absolute rent R, II 2R and III
4R. Now if No. IV is opened up, and if
this is more productive than I, II and III, and if it is so
extensive that the capital invested in it can be as great as
that in I, [then] in this case—the former state of
demand remaining constant—the same amount of
capital as was previously invested in I would now be
invested in IV. I would thereupon be closed and a part
of the capital invested in II would have to be
withdrawn. IV would suffice to replace I and a part of
II, but III and IV would not suffice to supply the whole
demand, without part of II continuing to be worked.
Let us assume, for the sake of the illustration, that
IV—using the same amount of capital as was previously
invested in I—is capable of providing the whole of the
supply from I and half the supply from II. If,
therefore, half the previous capital were invested in II,
the old capital in III and the new in IV, then the whole
market would be supplied.

||568| What changes had
taken place, or how would the changes accomplished affect
the general rental, the rents of I, II, III and IV?

The[a]absolute
rent, derived from IV, would, in amount and rate, be
absolutely the same as that formerly derived from I; in fact
the absolute rent, in amount and rate, would also
before have been the same on I, II and III, always supposing
that the same amount of capital was employed in those
different classes. The value of the produce of IV
would be exactly identical to that formerly employed on I,
because it is the produce of a capital of the same
magnitude and of a capital of the same organic
composition. Hence the difference between [the]
value [of the product] and its cost-price must be the same;
hence [also] the rate of rent. Besides, the amount [of
rent] must be the same, because—at a given rate
of rent—capitals of the same magnitude would have been
employed. But, since the [market] -value of the coal
is not determined by the [individual] value of the coal
derived from IV, it would bear an excess rent, or an
overplus over its absolute rent; a rent derived, not
from any difference between value and cost-price, but from
the difference between the market-value and the
individual value of the produce No. IV.

When we say that the absolute rent or the difference
between value and cost-price on I, II, III, IV, is the
same, provided the magnitude of the capital
invested in them, and therefore the amount of rent with a
given rate of rent is the same, then this is to be
understood in the following way: The (individual) value of
the coal from I is higher than that from II and that from II
is higher than that from III, because one ton from I
contains more labour than one ton from II and one ton from
II more than one ton from III. But since the
organic composition of the capital is in all three
cases the same, this difference does not affect the
individual absolute rent yielded by I, II, III, For
if the value of a ton from I is greater, so is its
cost-price; it is only greater in the proportion that
more capital of the same organic composition is
employed for the production of one ton in I than in
II and of one ton in II than in III. This difference
in their va1ues is, therefore, exactly equal to the
difference in their cost-prices, in other words to
[the difference in] the relative amount of capital expended
to produce one ton of coal in I, II and III. The
variation in the magnitudes of value in the three groups
does not, therefore, affect the difference between value
and cost-price in the various classes. If the
value is greater, then the cost-price is greater in the
same proportion, for the value is only greater in
proportion as more capital or labour is expended;
hence the relation between value and cost-price remains the
same, and hence absolute rent is the same.

But now let us go on to see what is the situation
regarding differential rent.

Firstly, less capital is now being employed in the
entire production of coal in II, III and IV. For the
capital in IV is as great as the capital in I had
been. Furthermore, half the capital employed in II is
now withdrawn. The amount of rent on II therefore will
at all events drop by a half. Only one change has
taken place in capital investment, namely in II, because in
IV the same amount of capital is invested as was previously
invested in I. We have, moreover, assumed that
capitals of the same size were invested in I, II and III,
for example £ 100 in each, altogether £ 300; now
therefore only £ 250 are invested in II, III and IV,
or one-sixth of the capital has been withdrawn from the
production of coal.

Moreover, the market-value of coal has
fallen. We saw that I yielded R, II 2R and III
4R. Let us assume that the product of £ 100 on I
was £ 120, of which R equalled £10 and £10
equalled the profit, then the market-value of II was £
130 (£ 10 profit and £ 20 rent), and of III
£ 150 (£ 10 profit and £ 40 rent).
If the product of I was 60 tons (£ 2 per ton), then
that of II was 65 tons and that of III was 75 tons and the
total production was 60+65+75 tons=200 tons. Now 100
will produce as much in IV as the total product of I and
half the product of II, namely, 60+32
1/2 tons=92 1/2
tons, which, according to the old market-value, would have
cost £ 185 and since the profit was 10 would thus have
yielded a rent of £ 75, amounting to 7
1/2 R, for the absolute rent equalled
£ 10.

II, III and IV continue to yield the same number of tons,
200, since 32 1/2+75+92
1/2=200 tons.

But what is the position now, with regard to market-value
and differential rents?

In order to answer this we must see what is the amount of
the absolute individual rent of II, We assume that
the absolute difference between value and cost-price
in this sphere of production equals £ 10, i.e. equals
the rent yielded by the worst mine, although this is not
necessary unless the market-value was absolutely
determined by the value of I. ||569| If this was, indeed, the case,
then the rent on I (if the coal from I were sold at its
value) in fact represented the excess of value over its own
cost-price and the general cost-price of commodities in this
sphere of production. II would therefore be
selling its products at their value, if it sold its tonnage
(the 65 tons) at £ 120, i.e., the individual ton at
£ 1 11/13. That instead it
sold them at £ 2 was only due to the excess of the
market-value, as determined by I, over its individual value;
it was due to the excess, not of its value, but of
its market-value over its cost-price.

Moreover, on the assumption made, II now sells instead of
65, only 32 1/2 tons, because a
capital of only £ 50 instead of a capital of £
100, is now invested in the mine.

Thus we have for II: Value of the product, £
1 11/13 per ton; number of tons is 32
1/2; total value of the product is
£ 60; rent is £ 5. The rent
has fallen from £ 20 to £ 5. If the
same amount of capital were still employed, then it
would only have fallen to £ 10. The rate has
therefore only fallen by half. That is, it has fallen
by the total difference that existed between the
market-value as determined by I and its own value,
the difference therefore that existed over and above the
difference between its own value and cost-price. Its
differential rent was £ 10; its rent is now £
10, equal to its absolute rent. In II, therefore, with
the reduction of the market-value to the value (of
coal from II) differential rent has disappeared and
consequently also the increased rate of rent which was
doubled by this differential rent. Thus it has been
reduced from £ 20 to £ 10; with this given
rate of rent, however, the rent has been further reduced
from £ 10 to £ 5, because the capital invested
in II has fallen by half.

Since the market-value is now determined by the
value of II, i.e., by £ 1 11/13
per ton, the market-value of the 75 tons produced by
III is now £ 138 6/13, of which
£ 28 6/13 are rent.
Previously the rent was £ 40. It has, therefore,
fallen by £ 11 7/13. The
difference between this rent and the absolute rent used to
be [£] 30; now it only amounts to [£] 18
6/13 (for 18
6/13+10=28
6/13), Previously it was 4R, now it is
only 2R+£ 8 6/13. As the
amount of capital invested in III has remained the same,
this fall is entirely due to the fall in the rate of
differential rent, i.e., the fall in the excess of the
market-value of III over its individual value.
Previously, the whole amount of the rent in III was equal to
the excess of the higher market-value over the price
of production, now it is only equal to the excess of the
lower market-value over the cost-price; the
difference is thus coming closer to the absolute rent of
III. With a capital of £ 100. III produces
75 tons, whose [individual] value is £ 120; one ton is
therefore equal to £ 1
3/5. But III sold the ton at
£ 2, the previous market-price, therefore, at £
2/5 more [than its individual
value]. On 75 tons, this amounted to [£]
2/5×75=£ 30, and this was in
fact the differential rent of rent III, for the rent was
[£] 40 ([£] 10 absolute and [£] 30
differential rent). Now, according to the new
market-value, the ton is sold at only £ 1
11/13. How much above its
[individual] value is this? [£] 1
3/5 =£ 1
39/65 and [£] 1
11/13=1 55/65 [1
55/65-1
39/65=16/65].
Thus the price at which the ton is sold is [£]
16/65 above its [individual]
value. On 75 tons this amounts to [£] 18
6/13, and this is exactly the
differential rent, which is thus always equal to the number
of tons multiplied by the excess of the market-value of the
ton over the [individual] value of the ton. It now
remains to work out the fall in rent by £ 11
7/13. The excess of the
market-value over the value of III has fallen from
2/5 of a £ per ton (when it was
sold at £ 2) to 16/65 per ton
(at £ 1 11/13), i.e., from
2/5=26/65 to
16/65, [which is by]
10/65. On 75 tons this amounts
to 750/65=
=150/13=11 7/13,
and this is exactly the amount by which the rent in III has
fallen.

If the 92 1/2 tons were sold at
their value (£ 120), then 1 ton would cost £ 1
11/37, Instead it is being sold at
£ 1 11/13. But £ 1
11/13=£ 1
407/481 and £ 1
11/37=£ 1
143/481. This makes the excess
of the market-value of IV over its value equal to
264/481. On 92
1/2 tons this amounts to exactly
£ 50 10/13, which is the
differential rent of IV.

Now let us put these two cases together, under A and
B.

A

Class

Capital

Absolute rent

Number of tons

Market-value per ton

Individual value per ton

Total value

Differential rent

£

£

£

£

£

£

I

100

10

60

2

2

120

0

II

100

10

65

2

111/13

130

13

III

100

10

70

2

13/5

150

30

Total

300

30

200

400

40

The total number of tons = 200. Total absolute rent
= £30. Total differential rent = £40.
Total rent = £70.

First of all we see that the amount of absolute
rent rises or falls proportionately to the capital
invested in agriculture, that is, to the total amount of
capital invested in I, II, III. The rate of this
absolute rent is quite independent of the size of the
capitals invested for it does not depend on the difference
in the various types of land but is derived from the
difference between value and cost-price; this latter
difference however is itself determined by the organic
composition of the agricultural capital, by the method
of production and not by the land. In II B, the
amount of the absolute rent falls from £ 10 to
£ 5, because the capital has fallen from £ 100
to £ 50; half ||571| the
capital has been withdrawn [from the land].

Before making any further observations on the two tables,
let us construct some other tables. We saw that in B
the market-value fell to £ 1
11/13 per ton. But [let us
assume that] at this value, there is no necessity
either for I A to disappear completely from the market, or
for II B to employ only half the previous capital.
Since in I, the rent is £ 10 out of the total value of
the commodity of £ 120, or 1/12
of the total value, [this applies] equally to the value of
the individual ton which is worth £ 2.
£2/12, however, is
£1/6 or 3
1/3s. (3
1/3s.X60=£10). The
cost-price of a ton from I is thus [£ 2-3
1/3s.=] £ 1 16
2/3s. The [new] market-value is
£ 1 11/13, or £ 1 16
12/13s. £ 1 16
2/3s., however, is £ 1
16s. 8d. or £ 1 1626/39s.
Against this, £ 1 1612/13s. are
£1 16 36/39s. or
10/39s. more. This would be the
rent per ton, at the new market-value and would amount to a
total rent of 15 5/13s. for 60
tons. Therefore I put less than 1 per cent rent on the
capital of £ 100. For I A to yield no rent at
all, the market-value would have to fall to its
cost-price, namely, to £ 1
162/3s, or to £ 1
5/6 (or to £
110/12). In this case the rent
on I A would have disappeared. It could, however,
continue to be exploited with a profit of 10 per cent.
This would only cease if the market-value were to fall
further, below [the cost-price of] £ 1
5/6.

So far as II B is concerned, it has been assumed in Table
B that half of the capital is withdrawn. But
since the market-value of £
111/13 still yields a rent of 10 per
cent, it will do so just as well on £ 100 as on
£ 50. If, therefore, it is assumed that half the
capital has been withdrawn, then only because under these
circumstances, II B still yields an absolute rent of 10 per
cent. For if II B had continued to produce 65 tons
instead of 32 1/2, then the market
would be over-supplied and the market-value of IV, which
dominates the market, would fall to such an extent, that the
capital investment in II B would have to be reduced in order
to yield the absolute rent. It is however clear that,
if the whole capital [of] £ 100 yields rent at 9 per
cent, the sum total is greater than that yielded by [a
capital of] £ 50 at 10 per cent. Thus if,
according to the state of the market, a capital of only
£50 were required in II to satisfy the demand, the
rent would have to be forced down to £ 5. It
would, in fact, fall even lower, if it is assumed that the
321/2 tons cannot always be disposed
of, i.e., if they were thrown out of the market. The
market-value would fall so low, that not only the rent on II
B would disappear, but the profit would also be
affected. Then capital would be withdrawn in order to
diminish supply, until the correct point of £ 50 had
been reached and then the market-value would have been
re-established at £ 1 11/13, at
which II B would again yield the absolute rent, but only on
half the capital previously invested in it. In this
instance too, the whole process would emanate from IV and
III, who dominate the market.

But it does not by any means follow that if the market
only absorbs 200 tons at £ 1
11/13 per ton, it will not absorb an
additional 32 1/2 tons if the
market-value falls, i.e., if the market-value of 232
1/2 tons is forced down through the
pressure of 32 1/2 surplus tons on the
market. The cost-price in II B is £ 1
9/13 or £ 1 13
11/13s. But the market-value is
£ 1 11/13 or £ 1 16
12/13s. If the market-value fell
to such an extent that I A no longer yielded a rent, i.e.,
[if the market-value fell] to the cost-price of I A, to
£ 1 16 2/3s. or £ 1
5/6 or £ 1
10/12, then for II B to use his whole
capital, demand would have to grow considerably; since I A
could continue to be exploited, as it yields the normal
profit. The market would have to absorb not 32
1/2 but 92 1/2
additional tons, 292 1/2 tons instead
of 200, i.e. [almost] half as much again. This is a
very significant increase. If a moderate increase is
to take place, the market-value would have to fall to such
an extent that I A is driven out of the market. That
is, the market-price would have to fall below the cost-price
of I A, i.e., below £ 1 10/12,
say, to £ 1 9/12 or £ 1
15s. It would then still be well above the cost-price
of II B.

We shall therefore add a further three tables to the
tables A and B, namely, C and D and
E. And we shall assume in C that the demand
grows, that all classes of A and B can continue to produce,
but at the market-value of B, at which I A still yields a
rent. In D we assume that [the demand] is sufficient
for I A to continue to yield the normal profit but no longer
a rent. And we shall assume in E that the price falls
sufficiently to eliminate I A from the market ||572| but that the fall of the price
simultaneously leads to the absorption of the 32
1/2 surplus tons from II B.

The case assumed in A and B is possible. It is
possible that if the rent is reduced from £ 10 to
barely 16s., I A would withdraw his land from this
particular form of exploitation and let it out to another
sphere of exploitation, in which it can yield a higher
rent. But in this case, II B would be forced through
the process described above, to withdraw half his capital,
if the market did not expand upon the appearance of the new
market-value.

C

Class

capital

Absolute rent

Number of tons

Market- value per ton

Individual value per ton

Total value

Rent

Differential rent

£

£

£

£

£

£

£

I

100

10/13

60

1 11/13

2

110 10/13

10/13

-93/13

II

100

10

65

111/13

111/13

120

0

III

100

10

75

111/13

13/5

1386/13

+186/13

IV

100

10

921/2

111/13

111/37

17010/13

+5010/13

Total

400

30 10/13

292 1/2

540

69 3/13

D

Class

capital

Absolute rent

Market- value per ton

Cost-price

Number of tons

Total value

Differential rent

£

£

£

£

£

£

I

100

0

15/6

1 5/6

60

110

0(-)

II

100

91/6

15/6

[19/13]

65

119 1/6

-(latent)

III

100

10

15/6

[17/15]

75

1371/2

+171/2

IV

100

10

15/6

[17/37]

921/2

1691/2

+497/12

Total

400

29 1/6

292 1/2

536 1/4

67 1/12

E

Class

Capital

Absolute rent

Market-value per ton

Cost-price

Number of tons

Total value

Differential rent

£

£

£

£

£

£

II

100

3 3/4

1 3/4

1 9/13

65

113 3/4

-(none)

III

100

10

13/4

[17/15]

75

1311/4

+11 1/4

IV

100

10

13/4

[17/37]

92 1/2

1617/8

+417/8

Total

300

23 3/4

232 1/2

406 7/8

53 1/8

||573| Now let us compile
the tables A, B, C, D and E, but in the manner which should
have been adopted from the outset. Capital, Total
value, Total product, Market-value per ton, Individual value
[per ton], Differential Value [per ton], Cost-Price [per
ton], Absolute rent, Absolute rent in tons, Differential
rent, Differential rent in tons, Total rent, And then the
totals of all classes in each table.

||575|Comment on the
Table (p. 574)

It is assumed that a capital of 100 (constant and
variable capital) is laid out and that the labour it employs
provides surplus-labour (unpaid labour) amounting to
one-fifth of the capital advanced, or a surplus-value of
100/5. If, therefore, the
capital advanced equals £ 100, the value of the total
product must be £ 120. Supposing furthermore
that the average profit is 10 per cent, then £ 110 is
the cost-price of total product, in the above example, of
coal. With the given rate of surplus-value or
surplus-labour, the £ 100 capital transforms itself
into a value of £ 120, whether poor or rich mines are
being exploited; in a word: The varying productivity of
labour—whether this variation be due to varying
natural conditions of labour or varying social conditions of
labour or varying technological conditions—does not
alter the fact that the value of the commodities equals the
quantity of labour materialised in them.

Thus to say the value of the product created by the
capital of £ 100 equals £ 120, simply means that
the product contains the labour-time materialised in the
£ 100 capital, plus one-sixth of labour-time which is
unpaid but appropriated by the capitalist. The total
value of the product equals £ 120, whether the capital
of £ 100 produces 60 tons in one class of mines or 65,
75 or 92 1/2 in another. But
clearly, the value of the individual part, be it measured by
the quarter or yard etc., varies greatly according to the
productivity. But to stick to our table (the same
applies to every other mass of commodities brought about by
capitalist production) the value of l ton equals £ 2,
if the total product of the capital is 60 tons, i.e., 60
tons are worth £ 120 or represent labour-time equal to
that which is materialised in £ 120. If the
total product amounts to 65 tons, then the value of the
individual ton is £ 11 1/13 or
£ 1 16 12/13s., if it amounts to
75 tons, then the value of the individual ton is £ l
9/15 or £ 1 12s.; finally, if it
comes to 92 1/2 tons, then the value
per ton is £ 1 11/37 or £
1 5 35/37s. Because the total
mass of commodities or tons produced by the capital of
£ 100 always has the same value, equal to £ 120,
since it always represents the same total quantity of labour
contained in £ 120, the value of the individual ton
varies, according to whether the same value is represented
in 60, 65, 75 or 92 1/2 tons, in other
words, it varies with the different productivity of
labour. It is this difference in the productivity of
labour which causes the same quantity of labour to be
represented sometimes in a smaller and sometimes in a larger
total quantity of commodities, so that the individual part
of this total contains now more, now less, of the absolute
amount of labour expended, and, therefore, accordingly has
sometimes a larger and sometimes a smaller value. This
value of the individual ton, which varies according to
whether the capital of £ 100 is invested in more
fertile or less fertile mines, and therefore according to
the different productivity of labour, figures in the table
as the individual value of the individual ton.

Hence nothing could be further from the truth than the
notion that when the value of the individual commodity falls
with the rising productivity of labour, the total value of a
product produced by a particular capital—for instance,
£ 100— rises because of the increased mass of
commodities in which it is [now] represented. For the
value of the individual commodity only falls because the
total value—the total quantity of labour
expended—is represented by a larger quantity of
use-values, of products. Hence a relatively smaller
part of the total value or of the labour expended falls to
the individual product and this only to the extent to which
a smaller quantity of labour is absorbed in it or a smaller
amount of the total value falls to its share.

Originally, we regarded the individual commodity
as the result and direct product of a particular quantity of
labour.

Now, that the commodity appears as the product of
capitalist production, there is a formal change in this
respect: The mass of use-values which has been produced
represents a quantity of labour-time, which is equal to the
quantity of labour-time contained in the capital (constant
and variable) consumed in its production, plus the unpaid
labour-time appropriated by the capitalist. If the
labour-time contained in the capital, as expressed in terms
of money, amounts to £ 100 and this capital of £
100 comprises £40 laid out in wages, and if the
surplus labour-time amounts to 50 per cent on the variable
capital, in other words, the rate of surplus-value is 50 per
cent, then the value of the total mass of commodities
produced by the capital of £ 100 equals £
120. As we have seen in the first part of this work,
if the commodities are to circulate, their exchange-value
must first be converted into a price, i.e., expressed in
terms of money. Thus ||576| before the capitalist throws
the commodities on to the market, he must first work out the
price of the individual commodity, unless the total product
is a single indivisible object, such as, for example, a
house, in which the total capital is represented, a single
commodity, whose price according to the assumption would
then be £ 120, equal to the total value as expressed
in terms of money. Price here equals monetary
expression of value.

According to the varying productivity of labour the total
value of £ 120 will be distributed over more or fewer
products. Thus the value of the individual product
will, accordingly, be proportionally equal to a larger or a
smaller part of £ 120. The whole operation is
quite simple. For example, if the total product equals
60 tons of coal, 60 tons are equal to £ 120 and 1 ton
equals £ 120/60, i.e., £2;
if the product is 65 tons, the value of the individual ton
equals £ 120/65, i.e., £ 1
11/13 or £ 1 16
12/13s. (£ 1 16s. 1
11/13d). If the product equals
75 tons, the value of the individual ton is
120/75, i.e., £ 1 12 s.; if it
equals 92 1/2 tons, then it is
£1 11/37, which is £ 1 5
35/37s. The value (price) of the
individual commodity is thus equal to the total value of the
product divided by the total number of products, which are
measured according to the standard of measurement—such
as tons, quarters, yards etc. appropriate to them as
use-values.

||574|

C

T

TV

MV

IV

DV

CP

AR

DR

AR in T

DR in T

TR

TR in T

[Class]

Capital

Number of tons

Total value

Market value per ton

Individual-value per ton

Differential value per ton

Cost-price per ton

Absolute rent

Differential rent

Absolute value in tons

Differential rent in tons

Rental

Rental in tons

£

£

£

£

£

A

I

100

60

120

£2[=40s.]

$2[=40s.]

0

£1 5/6 = £1 162/3s.

10

0

5

0

10

5

II

100

65

130

£2[=40s.]

£1 11/13= £1 1612/13s.

£ 2/13 = 31/13s.

£19/13 = 1 1311/13s.

10

10

5

5

20

10

III

100

75

150

£2[=40s.]

£1 3/5 = £ 1 12s.

£2/5=8s.

£17/15 = 91/3s.

10

30

5

15

40

20

Total

300

200

400

30

40

15

20

70

35

B

II

500

32 1/2

60

£1 11/13=£1 16 12/13s.

£1 11/13 = £1 16 12/13s.

0

£1 9/13 = £1 13 11/13s.

5

0

2 17/24

0

5

2 17/24

III

100

75

138 6/13

£111/13=£1 16 12/13s.

£1 3/5 = £ 1 12s.

£ 16/15 = 4 12/13s.

£1 7/15 = £1 9 1/3s.

10

18 6/13

5 5/12

10

28 6/13

15 5/12

IV

100

92 1/2

170 10/13

£1 11/13=£1 1612/13s.

£ 111/37 = £ 1 5 35/37s.

£264/481 = 10 470/481s.

£1 7/37 = £1 3 29/37s.

10

50 10/13

5 5/12

27 1/2

60 10/13

32 11/12

Total

250

200

369 3/13

25

69 3/13

13 13/24

37 1/2

94 3/13

51 1/24

C

I

100

60

110 10/13

£1 11/13=£1 16 12/13s.

£2 = 40s.

-£2/13 = -3 1/13s.

£1 5/6 = £1 16 2/3s.

£10/15 = 15 5/13s.

0

5/12

0

£10/13 = 15 5/13s.

5/12

II

100

65

120

£1 11/13=£1 16 12/13s.

£1 11/13 = £1 16 12/13s

0

£1 9/3 = £1 13 11/13s.

10

0

5 5/12

0

10

5 5/12

III

100

75

138 6/13

£1 11/13=£1 16 12/13s.

£1 3/5 = £1 12s.

+£16/65 = +4 12/13s.

£1 7/15 = £1 9 1/3s.

10

18 6/13

5 5/12

10

28 6/13

15 5/12

IV

100

92 1/2

170 10/13

£1 11/13=£1 16 12/13s.

£1 11/37= £1 5 35/37s.

+£ 264/481= +10 470/481s.

£1 7/15 = £1 3 29/37s.

10

50 10/13

5 5/12

27 1/2

60 10/13

32 11/12

Total

400

292 1/2

540

30 10/13

69 3/13

16 2/3

37 1/2

100

54 1/6

D

I

100

60

110

£1 5/6 = £1 16 2/3s.

£2 = 40s.

-£1/6 = -3 1/3s.

£1 5/6 = £1 16 2/3s.

0

0

0

0

0

0

II

100

65

119 1/6

£1 5/6 = £1 16 2/3s.

£1 11/13=£1 16 12/13s

-£ 1/78 = -10/39s.

£1 9/3 = £1 13 11/13s.

9 1/6

0

5

0

9 1/6

5

III

100

75

137 1/2

£1 5/6 = £1 16 2/3s.

£1 3/5 = £1 12s.

+£7/32 = +4 2/3s.

£1 7/15 = £1 9 1/3s.

10

17 1/2

5 5/11

9 6/11

27 1/2

15

IV

100

92 1/2

169 7/12

£1 5/6 = £1 16 2/3s.

£1 11/37 = £1 5 35/37s.

+£ 119/220= +10 80/111s.

£1 7/37 = £1 3 29/37s.

10

49 7/12

5 5/11

27 1/22

59 7/12

32 1/2

Total

400

292 1/2

536 1/4

29 1/6

67 1/12

15 10/11

36 13/22

96 1/4

52 1/2

E

II

100

65

113 3/4

£1 3/4 = £1 15s.

£ 1 11/13 = £1 16 12/13s.

[-£5/52] = -1 1213s.

£1 9/3 = £1 13 11/13s.

3 3/4

0

2 1/7

0

3 3/4

2 1/7

III

100

75

131 1/4

£1 3/4 = £1 15s.

£1 3/5= £1 12s.

[+£ 3/20]= +3s.

£1 7/15 = £1 9 1/3s.

10

11 1/4

5 5/7

6 3/7

21 1/4

12 1/7

IV

100

92 1/2

161 7/8

£1 3/4 = £1 15s.

£1 11/37 = £1 5 35/37s.

[+£73/138] = +9 2/37s.

£1 7/37 = £1 3 29/37s.

10

41 7/8

5 5/7

23 13/14

51 7/8

29 9/14

Total

300

232 1/2

406 7/8

23 3/4

53 1/8

15 10/11

30 5/14

76 7/8

43 13/14

If, therefore, the price of the individual commodity
equals the total value of the mass of commodities produced
by a capital of £100, divided by the total number of
commodities, then the total value equals the price of the
individual commodity multiplied by the total number of
individual commodities or it equals the price of a definite
quantity of individual commodities multiplied by the total
amount of commodities, measured by this standard of
measurement. Furthermore: The total value consists of
the value of the capital advanced to production plus the
surplus-value; that is of the labour-time contained in the
capital advanced plus the surplus labour-time or unpaid
labour-time appropriated by the capital. Thus the
surplus-value contained in each individual part of the
commodity is proportional to its value. In the same
way as the £ 120 is distributed among 60, 65, 75 or 92
1/2 tons, so the £ 20
surplus-value is distributed among them. When the
number of tons is 60, and therefore the value of the
individual ton equals 120/60, which is
£ 2 or 40s., then one-sixth of this 40s. or £ 2,
that is, 6 2/3s., is the share of the
surplus-value which falls to the individual ton; the
proportion of surplus-value in the ton which costs £ 2
is the same as in the 60 which cost £ 120. The
[ratio of] surplus-value to value remains the same in the
price of the individual commodity as in the total value of
the mass of commodities. In the above example, the
total surplus-value in each individual ton is
20/60=2/6=1/3
of [20], which is equal to 1/6 of 40
as above. Hence the surplus-value of the single ton
multiplied by 60 is equal to the total surplus-value which
the capital has produced. If the portion of value
which falls to the individual product—the
corresponding part of the total value—is smaller
because of the larger number of products, i.e., because of
the greater productivity of labour, then the portion of
surplus-value which falls to it, the corresponding part of
the total surplus-value which adheres to it, is also
smaller. But this does not affect the ratio of the
surplus-value, of the newly-created value, to the value
advanced and merely reproduced. Although, as we have
seen, the productivity of labour does not affect the total
value of the product, it may however increase the
surplus-value, if the product enters into the consumption of
the worker; then the falling price of the individual
commodities or, which is the same, of a given quantity of
commodities, may reduce the normal wage or, amounts
to the same, the value of the labour-power. In
so far as the greater productivity of labour creates
relative surplus-value, it increases not the total value of
the product, but that part of this total value which
represents surplus-value, i.e., unpaid labour.
Although, therefore, with greater productivity of labour, a
smaller portion of value falls to the individual
product—because the total mass of commodities which
represents this value has grown—and thus the price of
the individual product falls, that part of this price which
represents surplus-value, nevertheless, rises under
the above-mentioned circumstances, and, therefore, the
proportion of surplus-value to reproduced value grows
(actually here one should still refer to variable capital,
for profit has not yet been mentioned). But this is
only the case because, as a result of the increased
productivity of labour, the surplus-value has grown within
the total value. The same factor—the
increased productivity of labour—which enables a
larger mass of products to contain the same quantity of
labour thus lowering the value of a given part of this mass
or the price of the individual commodity, reduces the
value of the labour-power, therefore increases the surplus
or unpaid labour contained in the value of the total
product and hence in the price of the individual
commodity. Although thus the price of the
individual commodity falls, although the total
quantity of labour contained in it, and therefore its
value, falls, the proportion of surplus-value, which is a
component part of this value, increases. In other
words, the smaller total quantity ||577| of labour contained in the
individual commodity comprises a greater quantity of
unpaid labour than previously, when labour was less
productive, when the price of the individual commodity was
therefore higher, and the total quantity of labour contained
in the individual commodity greater. Although in the
present case one ton contains less labour and is therefore
cheaper, it contains more surplus-labour and therefore
yields more surplus-value.

Since in competition everything appears in a false form,
upside down, the individual capitalist imagines 1. that he
[has] reduced his profit on the individual commodity by
reducing its price, but that he makes a greater profit
because of the increased mass [of commodities] (here
a further confusion is caused by the greater amount of
profit which is derived from the increase in capital
employed, even with a lower rate of profit); 2. that he
fixes the price of the individual commodity and by
multiplication determines the total value of the product
whereas the original procedure is division and
multiplication is only correct as a derivative method based
on that division. The vulgar economist in fact does
nothing but translate the queer notions of the capitalists
who are caught up in competition into seemingly more
theoretical language and seeks to build up a justification
of these notions.

Now to return to our table.

The total value of the product or of the quantity
of commodities created by a capital of £100, equals
£ 120, however great or small—according to the
varying degree of the productivity of labour—the
quantity of commodities may be. The cost-price
of this total product, whatever its size, equals £ 110
if, as has been assumed, the average profit is 10 per
cent. The excess in value of the total product,
whatever its size, equals £ 10, which is one-twelfth
of the total value or one-tenth of the capital
advanced. This £ 10, the excess of value
over the cost-price of the total product, constitutes
the rent. It is evidently quite independent of
the varying productivity of labour resulting from the
different degrees of natural fertility of the mines, types
of soil, in short, of the natural element in which the
capital of £ 100 has been employed, for those
different degrees in the productivity of the labour
employed, arising from the different degrees of fertility of
the natural agent, do not prevent the total product from
having a value of £ 120, a cost-price of £ 110,
and therefore an excess of value over cost-price of £
10. All that the competition between capitals
can bring about, is that the cost-price of the
commodities which a capitalist can produce with £ 100
in coal-mining, this particular sphere of production, is
equal to £ 110. But competition cannot compel
the capitalist to sell the product at £ 110 which is
worth £ 120—although such compulsion exists in
other industries. Because the landlord steps in and
lays his hands on the £ 10. Hence I call this
rent the absolute rent. Accordingly it always
remains the same in the table, however the fertility
of the coal-mines and hence the productivity of labour may
change. But, because of the different degrees of
fertility of the mines and thus of the productivity of
labour, it is not always expressed in the same number of
tons. For, according to the varying productivity
of labour, the quantity of labour contained in £ 10
represents more or less use-values, more or less tons.
Whether with the variation in degrees of fertility, this
absolute rent is always paid in full or only in part,
will be seen in the further analysis of the table.

There is furthermore on the market coal produced in mines
of different productivity. Starting with the lowest
degree of productivity, I have called these, I, II, III,
IV. Thus, for instance, the first class produces 60
tons with a capital of £ 100, the second class
produces 65 tons etc. Capital of the same size—
£ 100, of the same organic composition, within the
same sphere of production—does not have the same
productivity here, because the degree of productivity of
labour varies according to the degree of productivity of the
mine, type of soil, in short of the natural agent. But
competition establishes one market-value for these
products, which have varying individual values.
This market-value itself can never be greater
than the individual value of the product of the least
fertile class. If it were higher, then this would
only show that the market-price stood above the
market-value. But the market-value must
represent real value. As regards products of
separate classes, it is quite possible, that their
[individual] value is above or below the
market-value. If it is above the market-value,
the difference between the market-value and their cost-price
is smaller than the difference between their
individual value and their cost-price. But as the
absolute rent equals the difference between their individual
||578| value and their
cost-price, the market-value cannot, in this case, yield the
entire absolute rent for these products. If the
market-value sank down to their cost-price, it would
yield no rent for them at all. They
could pay no rent, since rent is only the difference between
value and cost-price, and for them, individually, this
difference would have disappeared, because of the [fall in
the] market-value. In this case, the difference
between the market-value and their individual value is
negative, that is, the market-value differs from
their individual value by a negative amount.
The difference between market-value and individual value in
general I call differential value. Commodities
belonging to the category described here have a minus sign
in front of their differential value.

If, on the other hand, the individual value of the
products of a class of mines (class of land) is below
the market-value, then the market-value is a b o v
e their individual value. The value or
market-value prevailing in their sphere of production thus
yields an excess above their individual value.
If, for example, the market-value of a ton is £ 2, and
the individual value of a ton is £ 1 12s., then its
differential value is 8s. And since in the class in
which the individual value of a ton is £ 1 12s. the
capital of £ 100 produces 75 tons, the total
differential value of these 75 tons is 8 s.´75=£
30. This excess of the market-value for the total
product of this class over the individual value of
its product, which is due to the relatively greater
fertility of the soil or the mine, forms the differential
rent, since the cost-price for the capital remains the
same as before. This differential rent is greater or
smaller, according to the greater or smaller excess of the
market-value over the individual value.
This excess in turn is greater or smaller, according to the
relatively greater or smaller fertility of the class
of mine or land to which this product belongs, compared with
the less fertile class whose product determines the
market-value.

Finally, the individual cost-price of the products
is different in the different classes. For instance,
for the class in which a capital of £ 100 yields 75
tons the cost-price of the individual commodity would be
£ 1 9 1/3 s., since the total
value is £ 120 and the cost-price £ 110,
and if the market-value were equal to the individual value
in this class, i.e., £ 1 12 s., then the 75 tons sold
at £ 120 would yield a rent of £ 10, while
£ 110 would represent their cost-price.

But of course, the individual cost-price of a
single ton varies according to the number of tons in which
the capital of £ 100 is represented, or according to
the individual value of the individual products of
the various classes. If, for example, the capital of
£ 100 produces 60 tons, then the value per ton is
£ 2 and its cost-price £ 1 16
2/3 s.; 55 tons would be equal to
£ 110 or to the cost-price of the total product.
If, however, the £ 100 capital produces 75 tons, then
the value per ton is £ 1 12s., its cost-price £
1 9 1/3s., and 68
3/4 tons of the total product would
cost £ 110 or would replace the cost-price. The
individual cost-price, i.e., the cost-price of the
individual ton, varies in the different classes in the
same proportion as the individual value.

It now becomes evident from all the five tables, that
absolute rent always equals the excess of the value
of the commodity over its own cost-price. The
differential rent, on the other hand, is equal to the
excess of the market-value over its individual value.
The total rent, if there is a differential rent (apart from
the absolute rent), is equal to the excess of the
market-value over the individual value plus the excess of
the individual value over the cost-price, or the excess of
the market-value over the individual cost-price.

Because here the purpose is only to set forth the general
law of rent as an illustration of my theory of value and
cost-prices—since I do not intend to give a detailed
exposition of rent ||579| till
dealing with landed property ex professo—I have
removed all those factors which complicate the matter:
namely the influence of the location of the mines or
types of land; different degree of productivity of different
amounts of capital applied to the same mine or the
same type of land; the interrelationship of rents
yielded by different lines of production within the same
sphere of production, for example, by different branches of
agriculture; the interrelationship of rents yielded by
different branches of production which are, however,
interchangeable, such as, for instance, when land is
withdrawn from agriculture in order to be used for building
houses, etc. All this does not belong here.

[3. Analysis of the Tables]

Now for a consideration of the tables. They show
how the general law explains a great multiplicity of
combinations, while Ricardo, because he had a false
conception of the general law of rent, perceived only one
side of differential rent and therefore wanted to reduce the
great multiplicity of phenomena to one single case by means
of forcible abstraction. The tables are not intended
to show all the combinations but only those which are most
important, particularly for our specific purpose.

[a)] Table A [The Relation Between Market-Value and
Individual Value in the Various Classes]

In Table A, the market-value of a ton of coal is
determined by the individual value of a ton in class I,
where the mine is least fertile, hence the productivity of
labour is the lowest, hence the mass of products yielded by
the capital investment of £ 100 is the smallest and,
therefore, the price of the individual product (the price as
determined by its value) is the highest.

It is assumed that the market absorbs 200 tons, neither
more nor less.

The market-value cannot be above the
[individual] value of a ton in I, i.e., of that commodity
which is produced under the 1east favourable conditions of
production, II and III sell the ton above its individual
value because their conditions of production are more
favourable than those of other commodities produced within
the same sphere, this does not, therefore, offend
against the law of value. On the other hand, the
market-value could only be above the value of a ton in I, if
the product of I were sold above its value,
quite regardless of market-value. A difference
between market-value and [individual] value arises in
general not because products are sold absolutely
above their value, but only because the value of the
individual product may be different from the value of the
product of a whole sphere; in other words because the
labour-time necessary to supply the total
product—in this case 200 tons—may differ from
the labour-time which produces some of the tons—in
this case those from II and III—in short, because the
total product supplied has been produced by labour of
varying degrees of productivity. The difference
between the market-value and the individual value of a
product can therefore only be due to the fact that the
definite quantities of labour with which different parts of
the total product are manufactured have different degrees
of productivity. It can never be due to the value
being determined irrespective of the quantity of
labour altogether employed in this sphere. The
market-value could be above £ 2 per ton, only if I, on
the whole, quite apart from its relation to II and III, were
to sell its product above its value. In this
case the market-price would be above the
market-value because of the state of the market,
because of demand and supply. But the market-value
which concerns us here—and which here is assumed to be
equal to the market-price—cannot rise above
itself.

The market-value here equals the value of I,
which, more-over, supplies three-tenths of the entire
product on the market. since II and III only supply
sufficient amounts to meet the total demand, i.e., to
satisfy the additional demand over and above that which is
supplied by I, II and III have no cause, therefore, to sell
below £ 2 since the entire product can be sold at
£2. They cannot ||580| sell above £ 2
because I sells at £ 2 per ton. This law, that
the market-value cannot be above the
individual value of that product which is produced
under the worst conditions of production but provides
a part of the necessary supply, Ricardo distorts into the
assertion that the market-value cannot fall below the
value of that product and must therefore always be
determined by it. We shall see later how wrong this
is.

Because the market-value of a ton coincides with the
individual value of a ton in I, the rent it yields
represents the absolute excess of the value over its
cost-price, the absolute rent, which is £
10. II yields a differential rent of £ 10 and
III of £ 30, because the market-value, which is
determined by I, yields an excess of £ 10 for II and
of £ 30 for III, over their individual value
and therefore over the absolute rent of £ 10, which
represents the excess of the individual value over the
cost-price. Hence II yields a total rent of £ 20
and III of £ 40, because the market-value yields an
excess over their cost-price of £ 20 and £40
respectively.

We shall assume that the transition is from I, the least
fertile mine, to the more fertile II, and from this to the
yet more fertile mine III, It is true that II and III are
more fertile than I, but they satisfy only seven-tenths of
the total demand and, as we have just explained, can
therefore sell their product at £ 2, although its
value is only £ 1 16 12/13s.
and £ 1 12s. respectively. It is clear that when
the particular quantity required to satisfy demand is
supplied, and gradation takes place in the productivity of
labour which satisfies the various portions of this demand,
whether the transition is in one direction or the other, in
both cases the market-value of the more fertile classes will
rise above their individual value; in one case
because they find that the market-value is
determined by the unfertile class and the additional
supply provided by them is not great enough to occasion any
change in the market-value as determined by class I; in the
other case, because the market-value originally determined
by them—determined by class III or II—is now
determined by class I, which provides the additional supply
required by the market and can only meet this at a higher
value, which now determines the market-value.

[b) The Connection Between Ricardo’s Theory of Rent and
the Conception of Falling Productivity in Agriculture.
Changes in the Rate of Absolute Rent and Their Relation to
the Changes in the Rate of Profit]

In the case under consideration, for example, Ricardo
would say: We start out from class III. The additional
supply will, in the first place, come from II.
Finally, the last additional supply—demanded by the
market—comes from I, and since I can provide the
additional supply of 60 tons only at £ 120, that is at
£ 2 per ton, and since this supply is needed, the
market-value of a ton which was originally £ 1 12
s. and later £ 1 16 12/13 s.,
now rises to £ 2. But, on the other hand, it is
equally true, that if we start out from I, which satisfied
the demand for 60 tons at £2, then, however, the
additional supply is provided by II, the product of II is
sold at the market-value of £ 2 although the
individual value of it is only £ 1 16
12/13 s., for it is still only
possible to supply the 125 tons required if I provides 60
tons at a value of £ 2 per ton. The same
applies, if a new additional supply of 75 tons is required,
but III provides only 75 tons, only supplies the
additional demand, and therefore, as before, 60 tons have to
be supplied by I at £ 2. Had I supplied the
whole demand of 200 tons, they would have been sold at
£ 400. And this is what they are [sold] at now,
because II and III do not sell at the price at which they
can satisfy the additional demand for 140 tons, ||XII-581| but at the price at which
I, which only supplies three-tenths of the product, could
satisfy it. The entire product required, 200 tons, is
in this case sold at £ 2 per ton, because three-tenths
of it can only be supplied at a value of £ 2 per ton,
irrespective of whether the additional portions of the
demand were met by proceeding from III via II to I or from I
via II to III.

Ricardo says: If III and II are the starting-points,
their market-value must rise to the value (cost-price with
him) of I, because the three—tenths supplied by I are
required to meet the demand and the decisive point here is
therefore the required volume of the product and not
the individual value of particular portions of it. But
it is equally true that the three-tenths from I are just as
essential as before when I is the starting-point and II and
III only provide the additional supply. If,
therefore, I determined the market-value in the descending
line, it determines it in the ascending line for the same
reasons. Table A thus shows us the
incorrectness of the Ricardian concept that differential
rent depends on the diminishing productivity of
labour, on the movement from the more productive mine or
land to the less productive. It is just as compatible
with the reverse process and hence with the growing
productivity of labour. Whether the one or the other
takes place has nothing to do with the nature and existence
of differential rent but is a historical
question. In reality, the ascending and descending
lines will cut across one another, the additional demand
will sometimes be supplied by going over to more, sometimes
to less fertile types of land, mine or natural agent.
[In this it is] always supposed that the supply provided by
the natural agent of a new, different class—be it more
fertile or less fertile—only equals the additional
demand and does not, therefore, bring about a change in the
relation between demand and supply. Hence it
can only bring about a change in the market-value
itself, if the supply, can only be made available at higher
cost not however if it can be made available at lower
cost.

Table A thus reveals to us from the outset the
falseness of this fundamental assumption of Ricardo’s,
which, as Anderson shows, was not required, even on the
basis of a wrong conception of absolute rent.

If production proceeds in a descending line, from III to
Il and from II to I with recourse to natural agents of a
gradually decreasing fertility—then III, in which a
capital of 100 has been invested, will at first sell its
commodities at their value, at £ 120. This,
since it produces 75 tons, will amount to £ 1 12s. per
ton. If an additional supply of 65 is then required,
II, which invests a capital of 100, will similarly sell its
product at a value of £ 120. This amounts
to £ 1 1612/13s. per ton.
And if, finally, an additional supply of 60 tons were
required, which can only be provided by I, then it too will
sell its product at its value of £ 120, which
amounts to £ 2 per ton. In this process III
would yield a differential rent of £ 18
6/13 as soon as II came on the market,
whereas previously it only yielded the absolute rent of
£ 10. II would yield a differential rent of
£ 10 as soon as I came into the picture and
differential rent of III would then rise to £30.

Descending from III to I, Ricardo discovers that I does
not yield a rent, because in considering III he started out
from the assumption that no absolute rent exists.

There is indeed a difference between the ascending and
descending line. If the passage is from I to III, so
that II and III only provide the additional supply, then the
market-value remains equal to the individual value of I
which is £ 2. And if, as the supposition is
here, the average profit is 10 per cent, then it can be
assumed that the price of coal ([or] price of wheat—a
quarter of wheat etc. can always be substituted for a ton of
coal) will have entered into its calculation, since coal
enters into the consumption of the worker as a means of
subsistence as well as figuring as an auxiliary material of
considerable importance in constant capital. It can
therefore also be assumed that the rate of surplus-value
would have been higher and therefore the surplus-value
itself greater, hence also the rate of profit higher
than 10 per cent, if I [were] more productive or the value
of the ton had been below £ 2. This,
however, would be the case if III was the
starting-point. The [market]-value of the ton of coal
was then only £ 1 12 s.; when ||582| II entered, it rose to
£1 16 12/13s. and finally when I
appeared, it rose to £ 2. It can thus be assumed
that when only III was being worked—all other
circumstances, length of surplus labour-time and other
conditions of production etc. being taken as constant and
unchanged—the rate of profit was higher (the rate
of surplus-value was higher because one element of the
wage was cheaper; because of the higher rate of
surplus-value, the mass of surplus-value, and therefore also
the rate of profit, was higher; in addition
however—with the surplus-value thus modified—the
rate of profit was higher because an element of cost in the
constant capital was lower). The rate of profit became
lower with the appearance of II and finally sank to 10 per
cent, as the lowest level, when I appeared. In this
case therefore one would have to assume that (regardless of
the data) for instance the rate of profit was 12 per cent
when only III was being worked; that it sank to 11 per cent
when II came into play and finally to 10 per cent when I
entered into it. In this case the absolute rent would
have been £8 with III because the cost-price would
have been £ 112; it would have become £ 9 as
soon as II came into play because now the cost-price would
have been £ 111 and it would finally have been raised
to £ 10 because the cost-price would have fallen to
£ 110. Here then a change in the rate of
absolute rent itself would have taken place and this
in inverse ratio to the change in the rate of
profit. The rate of rent would have progressively
grown because the rate of profit had progressively
fallen. The latter would, however, have fallen because
of the decreasing productivity of labour in the mines, in
agriculture, etc. and the corresponding increase in the
price of the means of subsistence and auxiliary
materials.

[c)] Observations on the Influence of the Change in the
Value of the Means of Subsistence and of Raw Material (Hence
also the Value of Machinery) on the Organic Composition of
Capital

In this case the rate of rent rose because
the rate of profit fell. Now did it fall
because there was a change in the organic composition of the
capital? If the average composition of the capital was
£ 80c+£20v, did this composition
remain the same? It is assumed that the normal
working-day remains the same. Otherwise the influence
of the increased price of the means of subsistence could be
neutralised. We must differentiate between two factors
here. Firstly, an increase may occur in the price of
the means of subsistence, hence reduction in surplus-labour
and surplus-value. Secondly, constant capital may
become more expensive because, as in the case of coal, the
auxiliary material, or in the case of wheat, another element
of constant capital, namely seeds, rises in value or also,
[because] due to the increased price of wheat, the
cost-price of other raw produce (raw material) may
rise. Finally, if the product was iron, copper etc.,
the raw material of certain branches of industry and the raw
material of machinery (including containers) of all branches
of industry would rise.

On the one hand it is assumed that no change has taken
place in the organic composition of capital; in other words
that no change has taken place in the manner of production
decreasing or increasing the amount of living labour
employed in proportion to the amount of constant capital
employed. The same number of workers as before
is required (the limits of the normal working-day remaining
the same) in order to work up the same volume of raw
material with the same amount of machinery etc., or, where
there is no raw material, to set into motion the same amount
of machinery, tools, etc. Besides this first aspect of
the organic composition of capital, however, a second aspect
has to be considered, namely, the change in the value
of the elements of capital although as use-values they
may be employed in the same portions. Here again we
must distinguish:

The[b]change in
value affects both elements—variable and
constant—equally. This may never occur in
practice. A rise in the price of certain agricultural
products such as wheat etc., raises the (necessary) wage and
the raw material (for instance seeds). A rise in coal
prices raises the necessary wage and the auxiliary material
of most industries. While in the first case the rise
in wages occurs in all branches of industry, that in raw
materials occurs only in some. With coal, the
proportion in which it enters into wages is lower than that
in which it enters into production. As regards
total capital, the change in the value of coal and
wheat is thus hardly likely to affect both elements of
capital equally. But let us suppose this to be
the case.

Let the value of the product of a capital £ 80c+£ 20v be £ 120.
Considering capital as a whole, the value of
the product and its cost-price coincide, for the
difference is equalised out for the aggregate capital [of
the country]. The rise in value of an article such as
coal which, according to the assumption, enters into both
component parts of capital in equal proportions,
brings about a rise in cost by one-tenth for both
elements. Thus £ 80c would now only buy as many
commodities as could previously be bought with
[approximately] £70c and with £20v only as many
workers could be paid as previously with [approximately]
£18v. Or, in order to continue production on the
old scale, [approximately] £ 90c and £ 22v would
now have to be laid out. The value of the product, as
previously, is now £ 120, of which, however, the
outlay amounts to £ 112 (£90 constant and
£22 variable). Thus the profit is £8 and
on £ 112 this works out at 1/14,
which is 7 1/7 per cent. Hence
the value of the product from £ 100 capital advanced
is now equal to £ 107 1/7.

What is the ratio in which c and v now
enter into this new capital? Previously the ratio
v:c was as 20:80, as 1:4; now it is as 22:90 [or] as
11:45.
1/4=45/180;
11/45=44/180.
That means that variable capital has decreased by
1/180||583| as against constant
capital. In keeping with the assumption that the
increase in price of coal etc. has proportionally the
same effect on both parts of the capital, we must put it
as £ 88c+£ 22v. For the value of the
product is £ 120; from this has to be deducted an
outlay of £ 88+£ 22=£ 110. This
leaves a profit of £ 10. 22:88=20:80. The
ratio of c to v would have remained
the same as in the old capital. As before, the
ratio would be v:c as 1:4. But £ 10
profit on £ 110 is 1/11, which
is 9 1/11 per cent. If
production is to be continued on the same scale, £ 110
capital will have to be invested instead of £ 100, and
the value of the product [would continue to be] £
120. The composition of a capital of £ 100
however would be £ 80c+£ 20v, the value of the
product being £ 109 1/11.

If, in the above case, the value £ 80c had remained
constant and only v had varied, i.e., £ 22v
instead of £ 20v, then the previous ratio having been
20:80 or 10:40, it would now be 22:80 or 11:40. Now if
this change had taken place, then [the capital would amount
to] £ 80c+£ 22v [and the] value of the product
would be £ 120; therefore the outlay [would be]
£ 102 and the profit £ 18 i.e., 17
33/51 per cent. [But] 22:18 is
as 21 29/51:17
33/51. If £ 22v capital
need to be laid out in wages, in order to set in motion a
constant capital of £ 80 in value, then £ 21
29/51 are required in order to move a
constant capital of £ 78 22/51
in value. According to this ratio, only £ 78
22/51 would be laid out in machinery
and raw material from a capital of £ 100; £ 21
29/51 would have to go to wages,
whereas previously £ 80 was spent on raw material
etc. and only £ 20 on wages. The value of the
product is now £ 117
33/51. And the composition of
the capital: £ 7822/51c+£
21 29/51v. But £ 21
29/51+£ 17
33/51=£ 39
11/51. Under the previous
composition [of capital], the total labour put in was equal
to 40; now it is 39 11/51 or less by
40/51, not because the constant
capital has altered in value, but because there is
less constant capital to be worked on, hence a capital of
£ 100 can set in motion a little less labour than
before, although more dearly paid for.

If, therefore, a change in an element of cost, here a
rise in price—a rise in value—only alters (the
necessary) wage, then the following takes place: Firstly,
the rate of surplus-value falls; secondly, with a given
capital, less constant capital, less raw material and
machinery, can be employed. The absolute amount of
this part of the capital decreases in proportion to the
variable capital, and provided other conditions remain
the same, this must always bring about a rise in the
rate of profit (if the value of constant capital remains the
same). The [physical] volume of the constant
capital decreases although its value remains the
same. But the rate of surplus-value
decreases and also the [amount of] surplus-value
itself, because the falling rate is not accompanied by an
increase in the number of workers employed. The rate
of surplus-value—of surplus-labour—falls more
than the ratio of variable to constant capital. For
the same number of workers as before, that is the
same absolute quantity of labour, needs to be employed in
order to set in motion the same amount of constant
capital. Of this absolute quantity of labour more,
however, is necessary labour and less of it is
surplus-labour. Thus the same quantity of
labour must be paid for more dearly. Of the
same capital—£ 100 for instance—less
can thus be laid out in constant capital, since more has to
be laid out in variable capital to set in motion a smaller
constant capital. The fall in the rate of
surplus-value in this case is not connected with an increase
in the absolute quantity of labour which a particular
capital employs, or with the increase in the number of
workers employed by it. The [amount of] surplus-value
itself cannot therefore rise here, although the rate of
surplus-value falls.

Provided, therefore, that the organic composition of the
capital remains the same, in so far as its physical
component parts regarded as use-values are concerned; that
is, if change in the composition of the capital is not due
to a change in the method of production within the
sphere in which the capital is invested, but only to a rise
in the value of the labour-power and hence to a rise
in the necessary wage, which is equal to a decrease in
surplus-labour or the rate of surplus-value, which in this
case can be neither partly nor wholly neutralised by an
increase in the number of workers employed by a capital of
given size—for instance £ 100—then the
fall in the rate of profit is simply due to the fall in
surplus-value itself. If the method of production and
the ratio between the amounts of immediate and accumulated
labour used remain constant, this same cause then gives rise
to the change in the organic composition of capital—a
change which is only due to the fact that the value (the
proportional value) of the amounts employed has
changed. The same capital employs ||584| less immediate labour
proportionately as it employs less constant capital, but it
pays more for this smaller amount of labour. It can
therefore only employ less constant capital because the
smaller amount of labour which sets in motion this smaller
amount of constant capital, absorbs a greater part of the
total capital. In order, for example, to set in motion
£ 78 of constant capital, it must lay out £ 22
in variable capital, while previously £ 20v sufficed
to set in motion £80c.

This therefore happens when an increase in the price of a
product subjected to landed property, only affects
wages. The converse would result from the product
becoming cheaper.

But now let us take the case assumed above. The
increased price of the agricultural product is supposed to
affect constant and variable capital proportionately to
the same degree. According to the assumption,
therefore, there is no change in the organic composition
of the capital. Firstly, no change in the
method of production. The same absolute amount of
immediate labour sets in motion the same amount of
accumulated labour as before. The ratio of the
amounts remains the same. Secondly, no change in
the proportion of value as between accumulated and
immediate labour. If the value of one rises or falls,
so does that of the other in the same proportion to
its relative size, which thus remains unchanged. But
previously [we had] : £ 80c+£ 20v; value of
the product £ 120. Now £ 88c+£
22v, value of the product [likewise] £ 120. This
yields £ 10 on £ 110 or 9
1/11 per cent [profit; for a capital
of] £ 80c+£ 20v therefore the value of [the
product is] £ 109 1/11,

Previously we had:

Constant Capital

Variable capital

Surplus-value

Rate of profit

Rate of surplus-value

£80

£20

£20

20 per cent

100 per cent

Now we have:

Constant Capital

Variable capital

Surplus-value

Rate of profit

Rate of surplus-value

£80

£20

£9 1/11

9 1/11 per cent

45 5/11 per cent

£ 80c represents less raw material etc. here and
£ 20v less absolute labour in the same proportion. The
raw material etc. has become dearer and [a capital of]
£ 80 therefore buys a smaller quantity of raw material
etc.; thus, because the method of production has
remained the same, it requires less immediate
labour. But the smaller quantity of immediate labour costs
as much as the larger quantity of immediate labour did
before, and it has become dearer exactly to the same extent
as the raw material etc, and has therefore decreased in the
same proportion. If, therefore, the surplus-value had
remained the same, then the rate of profit would have sunk
in the same proportion in which the raw material etc. had
become dearer and in which the ratio of the value of the
variable to the constant capital had changed. The rate of
surplus-value however has not remained the same, but has
changed in the same proportion as the value of the variable
capital has grown. Let us take [another] example.

The value of a pound of cotton has gone up from 1s. to
2s. Previously, £ 80 (we take machinery
etc. here as equal to nil) could buy 1,600 lbs. Now
£80 will only buy 800 lbs. Previously, in order
to spin 1,600 lbs., £ 20 [were] required to pay the
wages of, say, 20 workers. In order to spin the 800
lbs, only 10 [workers are needed], since the method of
production has remained the same. The 10 had
previously cost £ 10, now they cost £ 20, just
as the 800 lbs. would previously have cost £ 40, and
now cost £ 80. Assume now that the profit was
previously 20 per cent. This would involve:

Constant capital

Variable capital

Surplus-value

Rate of surplus-value

Rate of profit

Product

Price per lb. of yarn

I

£80=1,600 lbs. cotton

£20=20 workers

£20

100per cent

20 per cent

1600 lbs. yarn

1s. 6d.

II

£80=800 lbs. cotton

£20=10 workers

£10

50 per cent

10 per cent

800 lbs. yarn

2s. 9d

For if the surplus-value created by 20 workers is 20,
then that created by 10 is 10; in order to produce it,
however, £ 20 needs to be paid out, as before, whereas
according to the earlier relationship, only 10 was
paid. The value of the product, of the ||585| lb. of yarn, must in this case
rise at any rate, because it contains more labour,
accumulated labour (in the cot-ton which enters into it) and
immediate labour.

If only cotton had risen and wages had remained the same,
then the 800 lbs. of cotton would also have been spun by 10
workers. But these 10 workers would only have cost
£ 10. That is, the surplus-value of 10 [would]
as before have amounted to 100 per cent. In order to
spin 800 lbs. of cotton, 10 workers [would be] needed with a
capital outlay of 10. Thus total capital outlay would
have been £ 90. Now according to the assumption
there would always be 1 worker per 80 lbs. of cotton.
Hence on 800 lbs. 10 workers and on 1,600 lbs. 20. How
many pounds therefore could the total capital of £ 100
spin now? £ 88 8/9 could
be used to buy cotton and £ 11
1/9 could be laid out in wages.

The relative proportions would be:

Constant capital

Variable capital

Surplus-value

Rate of surplus-value

Rate of profit

Product

Price per lb. of yarn

III

£88 8/9= 88 8/9 lbs.

£11 1/9 = 11 1/9 workers

£11 1/9

100per cent

11 1/9 per cent

888 8/9 lbs. yarn

2s. 6d.

In this case, where no change in the value
of variable capital takes place, and the rate of
surplus-value therefore remains the same, [we have the
following]:

In I, variable capital is to constant capital as
20:80=1:4. In III, it is as 11
1/9:88 8/9=1:8;
it has thus fallen proportionally by one half, because the
value of constant capital has doubled. The same
number of workers spin up the same amount of cotton, but
£ 100 now only employ 11 1/9
workers, while the remaining £ 88
8/9 only buy 888
8/9 lbs. of cotton instead of 1,600
lbs. [as in] I. The rate of surplus-value has
remained the same. But owing to the change in the
value of the constant capital, the same number of workers
can no longer be employed by a capital of £ 100; the
ratio between variable and constant capital has
changed. Consequently the amount of surplus-value
falls and with it the profit, since this surplus-value is
calculated on the same amount of capital outlay as
before. In the first case, the variable capital
(i.e. 20) was 1/4 of the constant
capital (20:80) and 1/5 of the total
capital. Now it is only 1/8 of
the constant capital (11 1/9:88
8/9) and 1/9 of
100, the total capital. But 100 per cent on
100/5 or 20 is 20 and 100 per cent on
100/9 or 11 1/9
is only 11 1/9. If the wage
remains the same here, or the value of the variable capital
remains the same, its absolute amount falls, because the
value of the constant capital has risen.
Therefore the percentage of the variable capital falls and
with it surplus-value itself, its absolute amount, and hence
the rate of profit.

If the value of the variable capital remains
the same and the method of production remains the
same, and therefore the ratio between the amounts of
labour, raw material and machinery employed remains the
same, a change in the value of the constant capital
brings about the same variation in the composition of
capital as if the value of constant capital had
remained the same, but a greater amount of capital of
unchanged value (thus also a greater capital
value) had been employed, in proportion to the capital
laid out in labour. The consequence is necessarily a
fall in profit. (The opposite takes place if the value
of constant capital falls.)

Conversely, a change in the value of the variable
capital—in this case a rise—increases the
proportion of variable to constant capital and
therefore also the percentage of variable capital, or its
proportional share in the total capital. Nevertheless,
the rate of profit falls here, instead of rising, for
the method of production has remained the
same. The same amount of living labour as before
is employed now, in order to convert the same amount of raw
materials, machinery etc. into products. Here, as in
the above case, only a smaller total amount of immediate and
accumulated labour can be set in motion with the same
capital of £ 100 ||586|;
but the smaller amount of labour costs more. The
necessary wage has risen. A larger share of this
smaller amount of labour represents necessary labour and
therefore a smaller amount forms surplus-labour. The
rate of surplus-value has fallen, while at the same time the
number of workers or the total quantity of labour under the
command of the same capital has diminished. The
variable capital has increased in proportion to constant
capital and hence also in proportion to total capital,
although the amount of labour employed in proportion
to the amount of constant capital has decreased. The
surplus-value consequently falls and with it the rate of
profit. Previously, the rate of surplus-value
remained the same, while the rate of profit fell,
because the variable capital fell in proportion to
the constant capital and hence in proportion to the total
capital, or the surplus-value fell because the number of
workers decreased, its multiplier decreased, while the
rate remained the same. This time the rate of
profit falls because the variable capital rises in
proportion to the constant capital, hence also to the total
capital; this rise in variable capital is, however,
accompanied by a fall in the amount of labour employed (of
labour employed by the same capital), in other words,
the surplus-value falls, because its decreasing rate
is bound up with the decreasing amount of labour
employed. The paid labour has increased in
proportion to the constant capital, but the total quantity
of labour employed has decreased.

These variations in the value therefore always affect the
surplus-value itself, whose absolute amount decreases in
both cases because either one or both of its two factors
fall. In one case it decreases because the number of
workers decreases while the rate of surplus-value remains
the same, in the other, because both the rate decreases and
the number of workers employed by a capital of £ 100
decreases.

Finally we come to case II, where the change in the value
of an agricultural product affects both parts of capital in
the same proportion and where this change of
value is therefore not accompanied by a change in the
organic composition of capital.

In this case (see p. 584) the pound of yarn rises from
1s, 6d. to 2s. 9d., since it is the product of more
labour-time than before. It contains just as much
immediate (although more paid and less unpaid) labour as
before, but more accumulated labour. Due to the change
in the value of cotton from is, to 2s., 2s. instead of
1s. is incorporated in the value of the lb. of yarn.

Example II on page 584 however is incorrect. We
had:

Constant capital

Variable capital

Surplus-value

Rate of surplus-value

Rate of profit

Product

Price per lb. of yarn

I

£80=1,600 lbs. cotton

£20=20 workers

£20

100 per cent

20 per cent

1,600 lbs. yarn

1s. 6d.

The labour of 20 workers is represented by £
40. Of this, half is unpaid labour here, hence
[£]20 surplus-value. According to this ratio, 10
workers will produce (a value of) £ 20 and of this
[£] 10 [are] wages and [£] 10 surplus-value.

If, therefore, the value of the labour-power rose in the
same proportion as that of the raw material, i.e., if it
doubled, then it would be £ 20 for 10 workers as
compared with £ 20 for 20 workers before. In
this case, there would be no surplus-labour left. For
the value, in terms of money, which the 10 workers produce
is equal to £ 20, if that which the 20 produce is
equal to £ 40. This is impossible. If this
were the case, the basis of capitalist production would have
disappeared.

Since, however, the changes in value of constant and
variable capital are supposed to be the same
(proportionally), we must put this case differently.
Therefore say the value of cotton rose by one-third;
£80 now buy 1,200 lbs. cotton, whereas previously they
bought 1,600. Previously £ 1=20 lbs. [cotton] or
1 lb. [cotton]=£ 1/20=1s. Now
£ 1=15 lbs, or 1 lb.=£
1/15= =1
1/3s. or 1s. 4d. Previously 1
worker cost £ 1, now £ 1
l/3= £ 1 6 2/3s. or
£ 1 6s. 8d. and for 15 men [that] amounts to £
20 (£15+£l5/3).
||587| Since 20 men produce a
value of £40, 15 men produce a value of £
30. Of this value, £ 20 [are] now their wages
and £ 10 surplus-value or unpaid labour,

Thus we have the following:

Constant capital

Variable capital

Surplus-value

Rate of surplus-value

Bate of profit

Product

Price per lb. of yarn

IV

£80=1,200 lbs. cotton

£20= 15 men

£10

50 per cent

10 per cent

1,200 lbs. yarn

1s. 10d.

This 1s. 10d. [contains] cotton worth 1s. 4d. and labour
worth 6d.

The product becomes dearer because the cotton has become
dearer by a third. But the product is not dearer by a
third. Previously, in I, it was equal to 18d.; if,
therefore, it had become dearer by one-third, it would now
be 18d.+6d.=24d., but it is only equal to 22d.
Previously 1,600 lbs. yarn contained £40 labour, i.e.,
1 lb., £ 1/40 or
20/40s. or
1/2s.=6d. labour. Now 1,200
lbs. [yarn] contain £30 labour, 1 lb. therefore
contains £
1/40=1/2s. or
6d. labour. Although the labour has become dearer in
the same ratio as the raw material, the quantity of
immediate labour contained in 1 lb. of yarn has remained
the same, though more of this quantity is now paid
and less unpaid labour. This change in the value of
wages does not, therefore, in any way affected the value of
the lb. of yarn, of the product. Now as before, labour
only accounts for 6d., while cotton now accounts for
1s. 4d., instead of is., as previously. Thus, if the
commodity is sold at its value, the change in the
value of wages cannot after all bring about a change in the
price of the product. Previously, however, 3d. of the
6d. were wages and 3d. surplus-value; now 4d. are wages and
2d. surplus-value. In fact 3d. on wages per lb. of
yarn comes to 3×1,600d.=£ 20 for 1,600
lbs. yarn. And 4d. per pound amounts to 4×1,200=
£20 for 1,200 lbs. And 3d. on 15d. (1s. cotton
plus. 3d. wages) in the first example comes to
1/5 profit=20 per cent. On the
other hand, 2d. on 20d. (16d. cotton and 4d. wages) comes to
1/10 or 10 per cent.

If, in the above example, the price of cotton had
remained the same [then we would have the following]: 1 man
spins 80 lbs., since the method of production has remained
the same in all the examples, and the pound is again
equal to 1s.

Now the capital is made up as follows:

Constant capital

Variable capital

Surplus- value

Rate of surplus-value

Rate of profit

Product

Price per lb. of yarn

£73 1/3= 1,466
2/3 lbs. cotton

£26 2/3 (20 men)

£ 13 1/3

50 per cent

13 1/3 per cent

1,466 2/3 lbs.

1 6/11s.

This calculation is wrong; for if a man spins 80 lbs., 20
[men] spin 1,600 and not l,466 2/3,
since it is assumed that the method of
production has remained the same. This
fact can in no way be altered by the difference in the
remuneration of the man. The example must therefore be
constructed differently.

Constant capital

Variable capital

Surplus- value

Rate of surplus-value

Rate of profit

Product

Price per lb. of yarn

II

£75= 1,500 lbs. cotton

£25 (18 3/4 men)

£12 1/2

50 per cent

12 1/2 per cent

1,500 lbs. yarn

1s. 6d.

Of this 6d., 4d. wages and 2d, profit. 2 on
16=1/8=12 1/2
per cent.

Finally, if the value of the variable capital remained
the same as before, [i.e.], 1 man received £ 1,
whereas the value of the constant capital altered, so that l
lb. cotton cost 1s. 4d. or 16d., instead of 1s. then:

Constant capital

Variable capital

Surplus- value

Rate of surplus-value

Rate of profit

Product

Price per lb. of yarn

III

£84 4/19 = 1,263
3/19 lbs. cotton

£15 15/19 = (15
15/19 men)

£15 15/l9

100 per cent

1515/19 percent

1,263 3/19 lbs. [yarn]

1s. l0d.

||588| The profit [would be]
3d. On 19d. this comes to exactly 15
15/19 per cent.

Now let us put all these examples together, beginning
with I, where no change of value has as yet taken place.

Constant capital

Variable capital

Surplus -value

Rate of surplus-value

Rate of profit

Product

Price per lb. of yarn

Profit

I

£80=1,600 lbs. cotton

£20=20 workers

£20

100 per cent

20 per cent

1,600 lbs. yarn

1s. 6d.

3d.

II

£75= 1,500 lbs. cotton

£25= 18 3/4
workers

£12 1/2

50 per cent

12 1/2 per cent

1,500 lbs. yarn

1s. 6d.

2d.

III

£84 4/19 = 1,263
3/19 lbs. [cotton]

£15 15/19 =15
15/19 workers

£15 15/19

100 per cent

15 15/19 per cent

1,263 3/19 lbs. yarn

1s. 10d.

3d.

IV

280= 1,200 lbs. [cotton]

£20= 15 workers

£10

50 per cent

10 per cent

1,200 lbs. yarn

1s. l0d.

2d.

The price of the product has changed in III and IV,
because the value of constant capital has changed. On
the other hand, a change in the value of variable capital
does not bring about a change in price because the absolute
quantity of immediate labour remains the same and is only
differently apportioned between necessary labour and
surplus-labour.

Now what happens in example IV, where the change in value
affects constant and variable capital in equal
proportions, where both rise by one-third?

If only wages had risen (II), then the profit would have
fallen from 20 per cent to 12 1/2,
i.e., by 7 1/2 per cent. If
constant capital alone had risen (III), profit would have
fallen from 20 per cent to 15 15/19
per cent, i.e., by 4 4/19 per
cent. Since both rise to the same extent, profit falls
from 20 per cent to 10 per cent, i.e., by 10 per cent.
But why not by 7 1/2+4
4/19 per cent or by 11
27/38, which is the sum of the
differences of II and III? This 1
27/38 must be accounted for; in
accordance with that, the profit should have fallen (IV) to
8 11/38, instead of to 10. The
amount of profit is determined by the amount of
surplus-value and this is determined by the number of
workers, when the rate of surplus-labour is given. In
I there are 20 workers and half their labour-time is
unpaid. In II, only a third of the total labour is
unpaid, thus the rate of surplus-value falls; moreover, 1
1/4 less workers are employed and
therefore the number [of workers] or the total labour
decreases. In III the rate of surplus-value is again
the same as in I, one-half of the working-day is unpaid, but
as a result of the rise in value of the constant capital,
the number of workers falls from 20 to 15
15/19 or by 4
4/19. In IV (the rate of
surplus-value having fallen again to the level of that in
II, namely, one-third of the working-day), the number of
workers decreases by 5, namely, from 20 to 15.
Compared with I, the number of workers in IV decreases by 5,
compared with II by 3 3/4 and compared
with III by 15/19; but compared with I
it does not decrease by 11/4+4
4/19, i.e., by 5
35/76. Otherwise the number of
workers employed in IV would be 14
41/76.

Hence it follows that variations in the value of
commodities which enter into constant or variable
capital—when the method of production, or the
physical composition of capital, remains the same, in
other words, when the ratio of immediate and accumulated
labour remains constant—do not bring about a
change in the organic composition of the capital if they
affect variable and constant capital in the same
proportion, as in IV (where for instance cotton becomes
dearer to the same degree as the wheat which is consumed by
the workers). The rate of profit falls here (while the
value of constant and variable capital increases), firstly
because the rate of surplus-value falls due to the rise in
wages, and secondly, because the number of workers
decreases.

The change in value—if it affects only constant
capital or only variable capital—acts like a change in
the organic composition of capital and changes the
relative value of the component parts of capital,
although the method of production remains the same.
When only the variable capital is affected, it rises in
relation to the constant capital ||589| and to the total capital; and
not only the rate of surplus-value decreases, but also the
number of workers employed. Consequently the amount of
constant capital (whose value [remains] unchanged) employed
is also smaller (II).

If the change in value only affects the constant capital,
then the variable capital falls in proportion to the
constant capital and to the total capital. Although
the rate of surplus-value remains the same, its amount
decreases because the number of workers employed
falls (III).

Finally, it would be possible for the change in value to
affect both constant and variable capital, but in
uneven proportions. This case only requires to
be fitted into the above categories. Suppose, for
instance, that constant and variable capital were affected
in such a way that the value of the former rose by 10 per
cent and the latter by 5. Then in so far as they both
rose by 5 per cent, one by 5+5 and the other by 5, we would
have case IV. But in so far as the constant capital
changed by a further 5 per cent, we would have case III.

In the above, we have only assumed a rise in value.
With a fall we have the opposite effect. For example,
going from IV to I can be considered as a fall in value
which affected both component parts in equal
proportions. To assess the effect of a fall in
only [one component part], II and III would have to be
modified. |589||

***

||600| I would make the
following further observation on the influence of the
variation of value upon the organic com-position of capital:
With capitals in different branches of
production—with an otherwise equal physical
composition—it is possible that the higher
value of the machinery or of the material used, may
bring about a difference. For instance, if the cotton,
silk, linen and wool [industries] had exactly the same
physical composition, the mere difference in the cost of the
material used would create such a variation. |600||

[d) Changes in the Total Rent, Dependent on Changes in
the Market-Value]

||589| Returning to Table A
it thus follows, that the assumption, that the profit of 10
per cent has come about through a decrease (in that the rate
of profit, starting from III was higher, in II it was lower
than in III, but still higher than in I, where it was 10 per
cent) may be correct, namely, if the development actually
proceeded along the descending line; but this assumption by
no means necessarily follows from the gradation of rents,
the mere existence of differential rents; on the contrary
with the ascending line, this [gradation of rents]
presupposes that the rate of profit remains the same over a
long period.

Table B. As has already been explained
above, in this example the competition from III and IV,
forces [the cultivator of] II to withdraw half his
capital. With a descending line, it would on the
contrary appear that an additional supply of only 32
1/2 tons is required, hence only a
capital of £ 50 has to be invested in II.

But the most interesting aspect of the table is this:
Previously a capital of £ 300 was invested, now only
£ 250, i.e., one-sixth less. The amount of
product has however remained the same— 200 tons.
The productivity of labour has thus risen and the value of
the individual commodity fallen. The total
value of the commodities has likewise fallen, from
£ 400 to £ 369
3/13. As compared with A,
the market-value per ton has fallen from £ 2 to
£ 1 16 12/13s., since the new
market-value is determined by the individual value of
II instead of, as previously, by the higher one of I.
Despite all these circumstances—decrease in the
capital invested, decrease in the total value of the product
with the same volume of production, fall in the
market-value, exploitation of more fertile classes=the rent
in B, as compared with A, has risen
absolutely, by £ 24 3/13
(£ 94 3/13 as against £
70). If we examine how far the individual classes
participate in the increase in total rent, we find that in
class II the absolute rent, in so far as its rate is
concerned, has remained the same for £ 5 on £ 50
equals 10 per cent; but its amount has fallen by
half, from £ 10 to £ 5, because the capital
investment in II B has fallen by half, from £ 100 to
£ 50. Class II B, instead of effecting an
increase in the rental, effects a decrease by £
5. Furthermore, the differential rent for II B has
completely disappeared, because the market-value is now
equal to the individual value of II; this results in a
second loss of £ 10. Altogether then the
reduction in rent for class II amounts to £ 15.

In III the amount of absolute rent is the same; but as a
result of the fall in market-value, its differential value
has also fallen; hence also the differential rent. It
amounted to £ 30, now it amounts only to [£] 18
6/13. This is a reduction by
[£] 11 7/13. The rent for
II and III taken together has therefore fallen by [£]
26 7/13. It remains to account
for a rise, not of 24 3/13, as at
first sight it would seem, but of £ 50
10/13. Furthermore, however, for
B as compared with A, the absolute rent of I A has
disappeared as class I itself has disappeared. This
represents a further reduction by £ 10. Thus,
all in all, £ 60 10/13 must be accounted
for. But this is the rental of the new class IV
B. The rise in the rental of B is therefore only to be
explained by the rent from IV B. The absolute rent for
IV B, like that of all other classes, is £ 10.
The differential rent of £ 50
10/13, however, is due to ||590| the fact that the differential
value of IV is 10 470/481s. per ton,
and this has to be multiplied by 92
1/2 for that is the number of
tons. The fertility of II and III has remained the
same. The least fertile class has been removed
entirely and yet the rental rises because, due to its
relatively great fertility, the differential rent of IV
alone is greater than the total differential rent of A had
been previously. Differential rent does not depend on
the absolute fertility of the classes that are cultivated
for 1/2 II, III, IV [B are] more
fertile than I, II, III [A], and yet the differential rent
for 1/2 II, III, IV [B] is greater
than it was for I, II, III [A] because the greatest portion
of the product—92 1/2
tons—is supplied by a class whose differential value
is greater than that occurring in I, II, III A. When
the differential value for a class is given, the
absolute amount of its differential rent naturally depends
on the amount of its product. But this amount
itself is already taken into account in the calculation and
formation of the differential value. Because with
£ 100, IV produced 92 1/2 tons,
no more and no less, its differential value in B where the
market-value is £ 1 16
12/13s. per ton, amounts to 10
470/481s. per ton.

The whole rental in A amounts to £ 70 on £
300 capital, which is 23 1/3 per
cent. On the other hand in B, leaving out of account
the 3/13, it is £ 94 on £
250, which is 37 3/5 per cent.

Table C. Here it is assumed that class IV
having come into the picture and class II determining the
market-value, demand does not remain the same, as in Table
B, but it increases with the falling price, so that the
whole of the 92 1/2 tons which have
been newly added by IV is absorbed by the market. At
£ 2 per ton only 200 tons would be absorbed; at
£ 1 11/13, the demand grows to
292 1/2. It is wrong to assume
that the limits of the market are necessarily the same at
£ 1 11/13 per ton as at £
2 per ton. On the contrary, the market expands to a
certain extent with the falling price—even in the case
of a general means of subsistence, such as wheat.

This, for the time being, is the only point to
which we want to draw attention in Table C. Table
D. Here it is assumed that the 292
1/2 tons are absorbed by the market
only if the market-value falls to £ 1
5/6, which is the cost-price
per ton for class I, which therefore bears no rent but only
yields the normal profit of 10 per cent. This is the
case which Ricardo assumes to be the normal case and on
which we should therefore dwell at somewhat greater
length.

As in the preceding tables, the ascending line is here
presupposed at the outset; later we shall look at the same
process in the descending line.

If II, III and IV only provided an additional supply of
140, that is, an additional supply which the market absorbs
at £ 2 per ton, then I would continue to determine the
market-value.

But this is not the case. There is an overplus of
92 1/2 tons on the market, produced by
class IV. If this were, in fact, surplus production,
which exceeded the absolute requirements of the market, then
I would be completely thrown out of the market and II would
have to withdraw half its capital as in B. II would
then determine the market-value as in B. But it is
assumed that if the market-value decreases, the market can
absorb the 92 1/2 tons. How does
this occur? IV, III and 1/2II
dominate the market absolutely. In other words if the
market could only absorb 200 tons, they would throw out
I.

But to begin with let us take the actual position.
There are now 292 1/2 tons on the
market whereas previously there were only 200. II
would sell at its individual value, at £ 1
11/13, in order to make room for
itself and to drive I, whose individual value is £ 2,
out of the market. But since, even at this
market-value, there is no room for the 292
1/2 tons, IV and III exert pressure on
II, until the market-price falls to £ 1
5/6, at which price the classes IV,
III, II and I find room for their product on the market,
which at this||591|
market-price absorbs the whole product. Through
this fall in price, supply and demand are balanced. As
soon as the additional supply surpasses the capacity of the
market, as determined by the old market-value, each class
naturally seeks to force the whole of its product on
to the market to the exclusion of the product of the
other classes. This can only be brought about through
a fall in price, and moreover a fall to the level where the
market can absorb all products. If this
reduction in price is so great that the classes I, II
etc. have to sell below their costs of production,
they naturally have to withdraw [their capital from
production]. If, however, the situation is such that
the reduction does not have to be so great in order to bring
the output into line with the state of the market, then the
total capital can continue to work in this sphere of
production at this new market-value.

But it is further clear that in these circumstances it is
not the worst land, I and II, but the best, III and IV,
which determines the market-value, and so also the rent on
the best sorts of land determines those on the worse,
as Storch correctly grasped in relation to this
case.

IV sells at the price at which it can force its entire
product on to the market overcoming all resistance from the
other classes. This price is £ 1
5/6. If the price were higher,
the market would contract and the process of mutual
exclusion would begin anew.

That I determines the market-value [is correct] only on
the assumption that the additional supply from II etc. is
only the additional supply which the market can absorb at
the market-value of I. If it is greater, then I is
quite passive and by the room it takes up, only compels II,
III, IV to react until the price has contracted sufficiently
for the market to be large enough for the whole
product. Now it happens that at this market-value,
which is in fact determined by IV, IV itself pays a
differential rent of £ 49 7/12
in addition to the absolute rent, III pays a differential
rent of £ 17 1/2 in addition to
the absolute rent, II, on the other hand, pays no
differential rent and moreover, only pays a part of the
absolute rent, £ 9 1/6, instead
of £ 10, i.e., not the full amount of the absolute
rent. Why? Although the new market-value of
£ 1 5/6 is above its cost-price,
it is below its individual value. If
market-value were equal to its individual value, it
would pay the absolute rent of £ 10, which is equal to
the difference between individual value and
cost-price. But since it is below that, it only pays a
part of its absolute rent, £ 9
1/6 instead of £ 10; the actual
rent it pays is equal to the difference between market-value
and cost-price, but this difference is smaller than that
between its individual value and its cost-price.

<The actual rent is equal to the difference
between market-value and cost-price.>

The absolute rent is equal to the difference
between individual value and cost-price.

The differential rent is equal to the difference
between market-value and individual value.

The actual or total rent is equal to the absolute
rent plus the differential rent, in other words, it is equal
to the excess of the market-value over the individual value
plus the excess of the individual value over the cost-price
or [it is] equal to the difference between market-value and
cost-price.

If, therefore, the market-value is equal to the
individual value, the differential rent is nil and the total
rent is equal to the difference between individual value and
cost-price.

If the market-value is greater than the individual value,
the differential rent is equal to the excess of the
market-value over the individual value, the total rent,
however, is equal to this differential rent plus the
absolute rent.

If the market-value is smaller than the individual value,
but greater than the cost-price, the differential rent is a
negative quantity, hence the total rent is equal to the
absolute rent plus this negative differential rent, i.e.,
the excess of the individual value over the
market-value.

If the market-value is equal to the cost-price, then on
the whole rent is nil.

In order to put this down in the form of equations, we
shall call the absolute rent AR, the differential rent DR,
the total rent TR, the market-value MV, the individual value
IV and the cost-price CP. We then have the following
equations:

||592| 1. AR=IV-GP=+y

2. DR=MV-IV=x

3. TR=AR+DR=MV-IV+IV-CP= y+x=MV-CP

If MV>IV then MV-IV=+x. Hence: DR
positive and TR= y+x.

And MV-CP=y+x. Or MV-y-x=CP or
MV=y+x+CP. If MV<IV then
MV-IV=-x. Hence: DR negative and
TR=y-x.

And MV-CP=y-x. Or MV+x=IV. Or
MV+x-y=CP. Or MV=y-x+CP.

If MV=IV, then DR=0, x=0, because MV-IV=0.

Hence TR=AR+DR=AR+0=MV-IV+IV-CP=0+IV-CP=IV-CP=MV-CP=+y.

If MV=CP [then] TR or MV-CP=0

In the circumstances assumed, I pays no rent. Why
not? Because the absolute rent is equal to the
difference between the individual value and the
cost-price. The differential rent, however, is equal
to the difference between the market-value and the
individual value. But the market-value here is equal
to the cost-price of I. The individual value of I is
£ 2 per ton, the market-value £ 1
5/6. The differential rent of I
is therefore £ 1 5/6-£ 2,
which is -£ 1/6. The
absolute rent of I, however, is £ 2=£ 1
5/6, in other words, it is equal to
the difference between its individual value and its
cost-price, which is +£
1/6. Since, therefore, the
actual rent of I is equal to the absolute rent
(+£1/6) and the differential
rent (-£1/6), it is equal to
+£1/6-£1/6=0.
Thus category I pays neither differential rent nor absolute
rent, but only the cost-price, The value of its product is
£2; [it is] sold at £ 1
5/6, that means
1/12below its value which is 8
1/3 per cent below its
value. Category I cannot sell at a higher price,
because the market is determined not by I but by IV, III, II
in opposition to I. Category I can merely provide an
additional supply at the price of £ 1
5/6.

That I pays no rent, is due to the fact that the
market-value is equal to its cost-price.

This fact, however, is the result:

Firstly of the relatively low productivity of
I. What it has to supply, is 60 additional tons at
£ 1 5/6. Suppose instead
of supplying only 60 tons for [£] 100, I supplied 64
tons for [£] 100, i.e., 1 ton less than class
II. Then only £ 93 3/4
capital would have to be invested in I in order to supply 60
tons. The individual value of one ton in I would then
be £ 1 7/8 or £ 1 17
1/2s.; its cost-price: £ 1 14
3/8s. And since the market-value
is £ 1 5/6= =£ 1 16
2/3s., the difference between
cost-price and market value is 2
7/24s. And on 60 tons this would
amount to ||593| a rent of
£ 6 17 1/2s.

If therefore all the circumstances remained the same and
I were more productive than it is by
1/15 (since
60/15=4), it would still pay a part of
the absolute rent because there would be a difference
between the market-value and its cost-price, although a
smaller difference than between its individual value and its
cost-price. Here the worst land would therefore still
bear a rent if it were more fertile than it is. If I
were absolutely more fertile than it is, II, III IV would be
relatively less fertile compared with it. The
difference between its [value] and their individual values
would be smaller. The fact that I bears no rent
is therefore just as much due to the circumstance that it is
not absolutely more fertile as to the fact that II, III, IV
are not relatively less fertile.

Secondly, however: Given the productivity of I as
60 tons for £ 100. If II, III, IV, and
especially IV, which enters the market as a new competitor,
were less fertile, not only relatively as against I, but
absolutely, then category I could yield a rent, even
though this would only consist of a fraction of the absolute
rent. For since the market absorbs 292
1/2 tons at £ 1
5/6, it would absorb a smaller number
of tons, for instance 280 tons at a market-value higher than
£ 1 5/6. Every
market-value, however, which is higher than £ 1
5/6, i.e., higher than the production
costs of I, yields a rent for I, equal to the market-value
minus the cost-price of I.

It can thus equally well be said that I yields no rent
because of the absolute productivity of IV, for as long as
II and III were the only competitors on the market, it
yielded a rent and would continue to do so even despite the
advent of IV, despite the additional supply—although
it would be a lower rent—if for a capital outlay of
£ 100 IV produced 80 tons instead of 92
1/2 tons.

Thirdly: We have assumed that the absolute rent
for a capital outlay of £ 100 is £ 10, that is,
10 per cent on the capital or 1/11 on
the cost-price, and that therefore the value [of the product
yielded by] a capital of £ 100 in agriculture is
£ 120 of which £ 10 are profit.

It would be wrong to assume that if we [say]: £ 100
capital is laid out in agriculture and if one working-day
equals £ 1, then 100 working-days are laid out.
In general, if a capital of £ 100 equals 100
working-days then, in whatever branch of production this
capital may be laid out, [the newly-created value] is never
[equal to 100 working-days]. Supposing that one gold
sovereign equals one working-day of 12 hours, and that this
is the normal working-day, then the first question is, what
is the rate of exploitation of labour? That is, how
many of these 12 hours does the worker work for himself, for
the reproduction (of the equivalent) of his wage, and how
many does he work for the capitalist gratis? [How
great], therefore is the labour-time which the capitalist
sells without having paid for it and which is
therefore the source of the surplus-value and serves to
augment the capital? If the rate of exploitation is 50
per cent, then the worker works 8 hours for himself and 4
gratis for the capitalist. The product equals 12
hours, which is £ 1 (since according to the
assumption, 12 hours labour-time are contained in one gold
sovereign). Of these 12 hours, equal to £ 1, 8
recoup the capitalist for the wage and 4 form his
surplus-value. Thus on a wage of 13
1/3s., surplus-value equals 6
2/3s.; or on a capital outlay of
£ 1, it is 10s, and on £ 100, £ 50.
Then the value of the commodity produced with the £
100 capital would be £ 150. The profit of the
capitalist in fact consists in the sale of the unpaid labour
contained in the product. The normal profit is derived
from this sale of that which has not been paid for.

||594| But the second
question is this: What is the organic composition of
the capital? That part of the value of the capital
which consists of machinery etc. and raw material is
simply reproduced in the product, it reappears
remaining unaltered. This part of the capital the
capitalist must pay for at its value. It thus
enters into the product as a given predetermined
value. Only the labour used by the capitalist is
merely partly paid for by him, although it enters
wholly into the value of the product [and] is wholly
bought by him. Assuming the above to be the rate of
exploitation of labour, the amount of surplus-value for
capital of the same size will, therefore, depend on
its organic composition. If the capital A
consists of £ 80c+£ 20v, then the value of the
product is £ 110 and the profit is £ 10
(although it contains 50 per cent unpaid labour). If
the capital B consists of £ 40c+£ 60v,
then the value of the product is £ 130, and the profit
is £ 30 although it too contains only 50 per cent
unpaid labour. If the capital C consists of £
60c+ +£ 40v, then the value of the product is £
120 and the profit is £ 20 although, in this case too,
it comprises 50 per cent unpaid labour. Thus the three
capitals, equal to £ 300, yield a total profit of
£ 10+£ 30+£ 20=£ 60, and this makes
an average of 20 per cent for £ 100. This
average profit is made by each of the capitals if it sells
the commodity it produces at £ 120. The capital
A: £ 80c+£ 20v, sells at £ 10
above its value; capital B: £
40c+£ 60v, sells at £ 10 below its value;
capital C:£ 60c+£ 40v sells at its
value. All the commodities taken together, are sold at
their value: £ 120+£ 120+ £ 120=£
360. In fact the value of A+B+C equals £
110+£ 130+£ 120=£ 360. But the
prices of the individual categories are partly above,
partly below and partly at their value so that
each yields a profit of 20 per cent. The values of the
commodities, thus modified, are their cost-prices, which
competition constantly sets as centres of gravitation for
market-prices.

Now assume that the £ 100 laid out in agriculture
is composed of £ 60c+£ 40v (which, incidentally,
is perhaps still too low for v), then the value [of the
product] is £ 120. But this would be equal to
the cost-price in the industry. Suppose
therefore in the above case that the average price [of the
product produced] by a capital of [£]100 is
£110. We now say that if the agricultural
product is sold at its value, its value is £ 10
above its cost-price. It then yields a rent of
10 per cent and this we assume to be the normal thing
in capitalist production, that in contrast to other
products, the agricultural product is not sold at its
cost-price, but at its value, as a result of
landed property. The composition of the
aggregate capital is £ 80c+£ 20v, if the average
profit is 10 per cent. We assume that that of the
agricultural capital is £ 60c+£ 40v, that is, in
its composition wages— immediate labour—have a
larger share than in the total capital invested in the other
branches of industry. This indicates a relatively
lower productivity of labour in this branch. It is
true, that in some types of agriculture, for instance in
stock-raising, the composition may be £ 90c+£
l0v, i.e., the ratio of v:c may be smaller than in the total
industrial capital. Rent is, however, not determined
by this branch, but by agriculture proper, and, furthermore,
by that part of it which produces the principal means of
subsistence, such as wheat, etc. The rent in the
other branches is not determined by the composition of ||595| the capital invested in these
branches themselves, but by the composition of the capital
which is used in the production of the principal means of
subsistence. The mere existence of capitalist
production presupposes that vegetable food, not animal food,
is the largest element in the means of subsistence.
The interrelationship of the rents in the various branches
is a secondary question that does not interest us here and
is [therefore] left out of consideration.

In order, therefore, to make the absolute rent equal to
10 per cent, it is assumed that the general average
composition of the non-agricultural capital is £
80c+£ 20v and that of agricultural capital is £
60c+£ 40v.

The question now is whether it would make any difference
to case D, where class I pays no rent, if the agricultural
capital were differently constituted, for example £
50c+£ 50v or £ 70c+£ 30v? In the
first case, the value of the product would be £ 125,
in the second, £ 115. In the first case, the
difference arising from the different composition of the
non-agricultural capital would be £ 15, in the second
it would be 5. That is, the difference between the
value of the agricultural product and cost-price would in
the first case be so per cent higher than has been assumed
above, and in the second 50 per cent lower.

If the former were the case, if the value [of the
product] of £ 100 were £ 125, then the value per
ton for I [would be] equal to £ 2
1/12 in Table A. And this would
be the market-value for A, for class I determines the
market-value here. The cost-price for I A, on the
other hand, would be £ 1 5/6, as
before. Since, according to the assumption, the 292
1/2 tons are only saleable at £
1 5/6, this would therefore make no
difference, just as it would make no difference if the
agricultural capital [were] composed of £ 70c+£
30v or the difference between the value of the agricultural
produce and its cost-price [were] only £ 5, i.e., half
the amount [previously] assumed. If the
cost-price, and therefore the average organic
composition of the non-agricultural capital, were assumed to
be constant at £ 80c+£ 20v, then it would make
no difference to this case <I D> whether it [the
organic composition of the agricultural capital] were higher
or lower, although it would make a considerable difference
to Table A and it would make a difference of 50 per cent in
the absolute rent.

But let us now assume the opposite, that the composition
of the agricultural capital remains £ 60c+£ 40v,
as before and that of the non-agricultural capital
varies. Instead of being £ 80c+£ 20v, let
it be either £ 70c+£ 30v or £ 90c+£
l0v. In the first case the average profit [would be]
[£] 15 or 50 per cent higher than in the supposed
case; in the other, £ 5 or 50 per cent lower. In
the first case the absolute rent [would be] £ 5.
This would again make no difference to I D. In the
second case the absolute rent [would be] £ 15.
This too would make no difference to the case I D. All
this would therefore be of no consequence to I D, however
important it may continue to be for tables A, B, C, and E,
i.e., for the absolute determination of the absolute and
differential rent, whenever the new class— be it in
the ascending or the descending line—only supplies the
necessary additional demand at the old market-value.

***

Now the following question arises:

Can this case D occur in practice? And even
before this, we must ask: is it, as Ricardo assumes, the
normal case? It can only be the normal
case:

Either: if the agricultural capital is equal to £
80c+£ 20v, that is, to the average composition of the
non-agricultural capital, so that the value of the
agricultural produce would be equal to the cost-price
of the non-agricultural produce. For the time
being this is statistically wrong. The assumption of
this relatively lower productivity of agriculture is
at any rate more appropriate than Ricardo’s assumption of a
progressive absolute decrease in its
productivity.

||596| In Chapter I
“On Value” Ricardo assumes that the
average composition of capital prevails in gold and silver
mines (although he only speaks of fixed and circulating
capital here; but we shall “correct”
this). According to this assumption, these mines could
only yield a differential rent, never an absolute
rent. The assumption itself, however, in turn rests on
the other assumption, that the additional supply provided by
the richer mines is always greater than the additional
supply required at the old market-value. But it is
absolutely incomprehensible why the opposite cannot equally
well take place. The mere existence of differential
rent already proves that an additional supply is possible,
without altering the given market-value. For IV
or III or II would yield no differential rents if they did
not sell at the market-value of I, however this may have
been determined, that is, if they did not sell at a
market-value which is determined independently of the
absolute amount of their supply.

Or: case D would always have to be the normal one,
if the [conditions] presupposed in it are always the normal
ones; in other words, if I is always forced by the
competition from IV, III and II, especially from IV, to sell
its product below its value by the whole amount of
the absolute rent, that is, at the cost-price.
The mere existence of differential rent in IV, III, II
proves that they sell at a market-value which is
above their individual value. If Ricardo
assumes that this cannot be the case with I, then it is only
because he presupposes the impossibility of absolute
rent, and the latter, because he presupposes the identity
of value and cost-price.

Let us take case C where the 292
1/2 tons find a sale at a market-value
of £ 1 16 12/13 s. And,
like Ricardo, let us start out from IV, So long as only 92
1/2 tons are required, IV will sell at
£1 5 35/37s. per ton, i.e., it
will sell commodities that have been produced with a capital
of £ 100 at their value of £ 120, which yields
the absolute rent of £ 10. Why should IV sell
its commodity below its value, at its
cost-price? So long as it alone is there, III, II, I
cannot compete with it. The mere cost-price of
III is above the value which yields IV a rent of
£ 10, and even more so the cost-price of II and
I. Therefore III etc. could not compete, even if they
sold these tons at the bare cost-price.

Let us assume that there is only one class—the best
or the worst type of land, IV or I or III or II, this makes
no difference whatsoever to the theory—let us assume
that its supply is unlimited, that is,
relatively unlimited compared to the amount of the
given capital and labour which is in general available and
can be absorbed in this branch of production, so that land
forms no barriers and provides a relatively unlimited field
of action for the available amount of labour and
capital. Let us assume, therefore, that there is no
differential rent because there is no cultivation of land of
varying natural fertility, hence there is no
differential rent (or else only to a negligible
extent). Furthermore, let us assume that there is
no landed property; then clearly there is no absolute
rent and, therefore (as, according to our assumption, there
is no differential rent), there is no rent at
all. This is a tautology. For the existence of
absolute rent not only presupposes landed property,
but it is the posited landed property, i.e., landed
property contingent on and modified by the action of
capitalist production. This tautology in no way
helps to settle the question, since we explain that absolute
rent is formed as the result of the resistance
offered by landed property in agriculture to the capitalist
levelling out of the values of commodities to average
prices. If we remove this action on the part of landed
property—this resistance, the specific resistance
which the competition between capitals comes up against in
this field of action—we naturally abolish the
precondition on which the existence of rent is based.
Incidentally (as Mr. Wakefield sees very well in his
colonial theory), there is a contradiction in the assumption
itself: on the one hand, developed capitalist production, on
the other hand, the non-existence of landed property.
Where are the wage-labourers to come from in this case?

A somewhat analogous development takes place in
the colonies, even where, legally, landed property
exists, in so far as the government gives [land] gratis as
happened originally in the colonisation from England; and
even where the ||597|
government actually institutes landed property by selling
the land, though at a negligible price, as in the United
States, at 1 dollar or something of the sort per acre.

Two different aspects must be distinguished here.

Firstly: There are the colonies proper, such as in
the United States, Australia, etc. Here the mass of
the farming colonists, although they bring with them a
larger or smaller amount of capital from the motherland, are
not capitalists, nor do they carry on
capitalist production. They are more or less
peasants who work themselves and whose main object, in the
first place, is to produce their own livelihood,
their means of subsistence. Their main product
therefore does not become a commodity and is not
intended for trade. They sell or exchange the excess
of their products over their own consumption for imported
manufactured commodities etc. The other, smaller
section of the colonists who settle near the sea, navigable
rivers etc., form trading towns. There is no question
of capitalist production here either. Even if
capitalist production gradually conies into being, so that
the sale of his products and the profit he makes from this
sale become decisive for the farmer who himself works and
owns his land; so long as, compared with capital and labour,
land still exists in elemental abundance providing a
practically unlimited field of action, the first type of
colonisation will continue as well and production will
therefore never be regulated according to the needs
of the market—at a given market-value.
Everything the colonists of the first type produce over
and above their immediate consumption, they will throw
on the market and sell at any price that will bring in more
than their wages. They are, and continue for a long
time to be, competitors of the farmers who are already
producing more or less capitalistically, and thus keep the
market-price of the agricultural product constantly
below its value. The farmer who therefore
cultivates land of the worst kind, will be quite satisfied
if he makes the average profit on the sale of his farm,
i.e., if he gets back the capital invested, this is not the
case in very many instances. Here therefore we have
two essentially different conditions competing with one
another: capitalist production is not as yet dominant in
agriculture; secondly, although landed property exists
legally, in practice it only exists as yet sporadically, and
strictly speaking there is only possession of land. Or
although landed property exists in a legal sense, it
is—in view of the elemental abundance of land
relative to labour and capital—as yet unable to offer
resistance to capital, to transform agriculture into a field
of action which, in contrast to non-agricultural industry,
offers specific resistance to the investment of
capital.

In the second type of
colonies—plantations—where commercial
speculations figure from the start and production is
intended for the world market, the capitalist mode of
production exists, although only in a formal sense, since
the slavery of Negroes precludes free wage-labour, which is
the basis of capitalist production. But the business
in which slaves are used is conducted by
capitalists. The method of production which
they introduce has not arisen out of slavery but is grafted
on to it. In this case the same person is capitalist
and landowner. And the elemental [profusion]
existence of the land confronting capital and labour does
not offer any resistance to capital investment, hence none
to the competition between capitals. Neither does a
class of farmers as distinct from landlords develop
here. So long as these conditions endure, nothing will
stand in the way of cost-price regulating market-value.

All these preconditions have nothing to do with the
preconditions in which an absolute rent exists: that
is, on the one hand, developed capitalist production, and on
the other, landed property, not only existing in the legal
sense but actually offering resistance and defending the
field of action against capital, only making way for it
under certain conditions.

In these circumstances an absolute rent will exist, even
if only IV or III or II or I are cultivated. Capital
can only win new ground in that solely existing class [of
land] by paying rent, that is, by selling the agricultural
product at its value. It is, moreover, only in
these circumstances that there can first be talk of a
comparison and a difference between the capital invested in
agriculture (i.e., in a natural element as such, in primary
production) and that invested in non-agricultural
industry.

But the next question is this:

If one starts out from I, then clearly II, III, IV, if
they only provide the additional supply admissible at the
old market-value, will sell at the market-value determined
by I, and therefore, apart from the absolute rent, they will
yield a differential rent in proportion to their relative
fertility. On the other hand, if IV is the
starting-point, then it appears that certain objections
||598| could be made.

For we saw that II [in tables B and C] draws the absolute
rent if the product is sold at its value of £ 1
11/13 or at £ 1 16
12/13s.

In Table D the cost-price of III, the next
class (in the descending line) is higher than the
value of IV, which yields a rent of £ 10.
Thus there cannot be any question of competition or
underselling here—even if III sold at
cost-price. If IV, however, no longer satisfies the
demand, if more than 92 1/2 tons are
required, then its price will rise. In the above case,
it would have to rise by 3
43/111s. per ton, before III could
enter the field as a competitor, even at its
cost-price. The question is, will it enter into
it in these circumstances? Let us put this case in
another way. For the price of IV to rise to £ 1
12s., the individual value of III, the demand would not have
to rise by 75 tons. This applies especially to the
dominant agricultural product, where an insufficiency
in supply will bring about a much greater rise in
price than corresponds to the arithmetical
deficiency in supply. But if IV had risen to £1
12s., then at this market-value, which is equal to III’s
individual value, the latter would pay the absolute rent and
IV a differential rent. If there is any additional
demand at all, III can sell at its individual value, since
it would then dominate the market-value and there would be
no reason at all for the landowner to forgo the
rent.

But say the market-price of IV only rose to £ 1 9
1/3s., the cost-price of
III. Or in order to make the example even more
striking: suppose the cost-price of III is only £ 1
5s., i.e., only 1 8/37s. higher than
the cost-price of IV. It must be higher because
its fertility is lower than that of IV, Can III be taken in
hand now and thus compete with IV, which sells above III’s
cost-price, namely, at £1 5
35/37 s.? Either there is an
additional demand or not. In the first case the
market-price of IV has risen above its value, above £
1 5 35/37s. And then, whatever
the circumstances, III would sell above its
cost-price, even if not to the full amount of its absolute
rent.

Or there is no additional demand. Here in
turn we have two possibilities. Competition from III
could only enter into it if the farmer of III were at the
same time its owner, if to him as a capitalist landed
property would not be an obstacle, would offer no
resistance, because he has control of it, not as capitalist
but as landowner. His competition would force IV to
sell below its hitherto prevailing price of £ 1 5
35/37 s, and even below the price of
£ 1 5s. And in this way III would be driven out
of the field. And IV would be capable of driving III
out every time. It would only have no reduce the price
to the level of its own costs of production, which are lower
than those of III. But if the market expanded as a
result of the reduction in price engendered by III,
what then? Either the market expands to such an extent
that IV can dispose of its 92 1/2 tons
as before, despite the newly-added 75, or it does not expand
to this degree, so that a part of the product of IV and III
would be surplus. In this case IV, since it dominates
the market, would continue to lower [the price] until the
capital in III is reduced to the appropriate size, that is
until only that amount of capital is invested in it as is
just sufficient for the entire product of IV to be
absorbed. But at £ 1 5s. the whole product would
be saleable and since III sold a part of the product at this
price, IV could not sell above that. This however
would be the only possible case: temporary over-production
not engendered by an additional demand, but leading to an
expansion of the market. And this can only be the case
if capitalist and landowner are identical in III—i.e.,
if it is assumed once again that landed property does not
exist as a power confronting capital, because the capitalist
himself is landowner and sacrifices the landowner to the
capitalist. But if landed property as such confronts
capital in III, then there is no reason at all why the
landowner should hand over his acres for cultivation without
drawing a rent from them, why he should hand over his land
before the price of IV has risen to a level which is at
least above the cost-price of III. If this rise
is only ||599| small, then, in
any country under capitalist production, III will continue
to be withheld from capital as a field of action, unless
there is no other form in which it can yield a rent.
But it will never be put under cultivation before it yields
a rent, before the price of IV is above the
cost-price of III, i.e., before IV yields a differential
rent in addition to its old rent. With the further
growth of demand, the price of III would rise to its value,
since the cost-price of II is above the
individual value of III. II would be cultivated as
soon as the price of III had risen above £ 1,13
11/13s., and so yielded some rent for
II.

But it has been assumed in D that I yields no
rent. But this only because I has been assumed to be
already cultivated land which is being forced to sell
below its value, at its cost-price because of
the change in market-value brought about by the entry of
IV. It will only continue to be thus exploited, if the
owner is himself the farmer, and therefore in this
individual case landed property does not
confront capital, or if the farmer is a small capitalist
prepared to accept less than 10 per cent or a worker who
only wants to make his wage or a little more and hands over
his surplus-labour, which is equal to [£] 10 or
£ 9 or less, to the landowner instead of the
capitalist. Although in the two latter cases
fermage is paid, yet economically speaking, no rent,
and we are concerned with the latter. In the one case
the farmer is a mere labourer, in the other something
between labourer and capitalist.

Nothing could be more, absurd than the assertion that the
landowner cannot withdraw his acres from the market
just as easily as the capitalist can withdraw his capital
from a branch of production. The best proof of this is
the large amount of fertile land that is uncultivated in the
most developed countries of Europe, such as England, the
land which is taken out of agriculture and put to the
building of railways or houses or is reserved for this
purpose, or is transformed by the landlord into rifle-ranges
or hunting-grounds as in the highlands of Scotland
etc. The best proof of this is the vain struggle of
the English workers to lay their hands on the waste
land.

Nota bene: In all cases where the absolute rent, as in II
D, falls below its normal amount, because, as here, the
market-value is below the individual value of the class or,
as in II B, owing to competition from the better land, a
part of the capital must be withdrawn from the worse land or
where, as in I D, rent is completely absent, it is
presupposed:

1. that where rent is entirely absent, the
landowner and capitalist [are] one and the same
person; here therefore the resistance of landed property
against capital and the limitation of the field of action of
capital by landed property disappear but only in individual
cases and as an exception. The presupposition of
landed property is abolished as in the colonies, but only in
separate cases;

2. that the competition of the better
lands—or possibly the competition from the worse lands
(in the descending line)— leads to over-production and
forcibly expands the market, creates an additional demand by
forcing prices down. This however is the very case
which Ricardo does not foresee because he always argues on
the assumption that the supply is only sufficient to satisfy
the additional demand;

3. that II and I in B, C, D either do not pay the
full amount of the absolute rent or pay no absolute rent at
all, because they are forced by the competition from the
better lands to sell their product below its value,
Ricardo on the other hand presupposes that they sell their
product at its value and that the worst land
always determines the market-value, whereas in case I D,
which he regards as the normal case, just the opposite takes
place. Furthermore his argument is always based on the
assumption of a descending line of production.

If the average composition of the non-agricultural
capital is £80c+£ 20v, and the rate of
surplus-value is 50 per cent, and if the composition of the
agricultural capital is £ 90c+£ l0v, i.e.,
higher than that of industrial capital—which ||600| is historically incorrect for
capitalist production— [then there is] no absolute
rent; if it is £ 80c+£ 20v, which has not so
far been the case, [there is] no absolute rent; if it
is lower, for instance £ 60c+£ 40v,
[there is an] absolute rent.

On the basis of the theory, the following possibilities
can arise, according to the relationship of the different
categories to the market—i.e., depending on the extent
to which one or another category dominates the market:

A. The last class pays absolute rent.
It determines the market-value because all classes only
provide the necessary supply at this market-value.

B. The last class determines the
market-value; it pays absolute rent, the full rate of rent,
but not the full previous amount because competition from
III and IV has forced it to withdraw part of the capital
from production.

C. The excess supply which classes I,
II, III, IV provide at the old market-value, forces
the latter to fall; this however, being regulated by the
higher classes, leads to the expansion of the market.
I pays only a part of the absolute rent, II pays only the
absolute rent.

D. The same domination of
market-value by the better classes or of the inferior
classes by oversupply destroys rent in I altogether and
reduces it to below its absolute amount in II; finally
in

E. The better classes oust I from the market
by bringing down the market-value below the cost-price [of
I]. II now regulates the market-value because at
this new market-value only the necessary supply [is]
forthcoming from all three classes. |600||

||600| Now back to
Ricardo.

***

It goes without saying that when dealing with the
composition of the agricultural capital the value or price
of the land does not enter into this. The latter is
nothing but the capitalist rent.